The UK National Minimum Wage’s impact on productivity

Rizov, Marian and Croucher, Richard and Lange, Thomas (2016) The UK National Minimum Wage’s impact on productivity. British Journal of Management, 27 (4). ISSN 1045-3172

Full content URL: http://doi.org/10.1111/1467-8551.12171

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Abstract

Low pay poses issues for managers internationally. We examine productivity in low-paying sectors in Britain, since the National Minimum Wage’s (NMW) introduction. We use a multiple channel analytical strategy, emphasising the wage-incentives channel and linking it to a model of unobserved productivity. We estimate firm-specific productivity measures and aggregate them to the level of low-paying sectors. Difference-in-differences analysis illustrates that the NMW positively affected aggregate low-paying sector productivity. These findings highlight increased wages’ incentive effects with implications for management practice and public policy since ‘living’ wages may be productivity enhancing.

Keywords:minimum wage, incentives, productivity, UK, NotOAChecked
Subjects:L Social studies > L140 Econometrics
N Business and Administrative studies > N600 Human Resource Management
L Social studies > L360 Socio-economics
L Social studies > L110 Applied Economics
Divisions:Lincoln International Business School
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ID Code:22750
Deposited On:23 Mar 2016 15:15

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