By: Richard Dickens (Department of Economics, University of Sussex)
Rebecca Riley (National Institute of Economic and Social Research)
David Wilkinson (National Institute of Economic and Social Research)
A regression discontinuity approach is used to analyse the effect of the legislated increase in the UK National Minimum Wage (NMW) that occurs at age 22 on various labour market outcomes. Using data from the Labour Force Survey we find a 2- 4% point increase in the employment rate of low skilled individuals. Unemployment declines among men and inactivity among women. We find no such effect before the NMW was introduced and no robust impacts at age 21 or 23 years. Our results are robust to a range of specification tests.
Keywords: Minimum Wage Legislation, Low Wage