Why Has the British National Minimum Wage Had Little or No Impact on Employment?
Author InfoDavid Metcalf Abstract A century has passed since the first call for a British national minimum wage (NMW).That remarkable Fabian tract discussed wage setting, coverage, monopsony,international labour standards, inspection and compliance and the interaction betweenthe NMW and the social security system. The NMW was finally introduced in 1999.It has raised the real and relative pay of low wage workers, narrowed the gender paygap and now covers around 1-worker-in-10. The consequences for employment havebeen extensively analysed using information on individuals, areas and firms. There islittle or no evidence of any employment effects. The reasons for this include: animpact on hours rather than workers; employer wage setting and labour marketfrictions; offsets via the tax credit system; incomplete compliance; improvements inproductivity; an increase in the relative price of minimum wage-produced consumerservices; and a reduction in the relative profits of firms employing low pai
