The UK national minimum wage's impact on productivity

Journal article

Rizov, Marian, Croucher, Richard and Lange, Thomas Wilhelm Karl. (2016). The UK national minimum wage's impact on productivity. British Journal of Management. https://doi.org/10.1111/1467-8551.12171
AuthorsRizov, Marian, Croucher, Richard and Lange, Thomas Wilhelm Karl
Abstract

Low pay poses issues for managers internationally. We examine productivity in low-paying sectors in Britain, since the introduction of the National Minimum Wage (NMW). We use a multiple channel analytical strategy, emphasizing 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 wage incentive effects with implications for management practice and public policy since ‘living’ wages may be productivity enhancing.

Year2016
JournalBritish Journal of Management
PublisherWiley
ISSN1045-3172
Digital Object Identifier (DOI)https://doi.org/10.1111/1467-8551.12171
Scopus EID2-s2.0-84991688670
Open accessOpen access
Page range819 - 835
Publisher's version
License
Place of publicationUnited Kingdom
EditorsP. Budhwar and G. Wood
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