The UK National Minimum Wage's Impact on Productivity

Rizov, Marian; Croucher, Richard; Lange, Thomas

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.

Citation

Rizov, M., Croucher, R., & Lange, T. (2016). The UK National Minimum Wage's Impact on Productivity. British Journal of Management, 27(4), 819-835. https://doi.org/10.1111/1467-8551.12171

• Journal Article Type: Article
• Acceptance Date: Mar 8, 2016
• Online Publication Date: May 23, 2016
• Publication Date: 2016-10
• Deposit Date: Nov 25, 2021
• Publicly Available Date: Nov 25, 2021
• Journal: British Journal of Management
• Print ISSN: 1045-3172
• Electronic ISSN: 1467-8551
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 27
• Issue: 4
• Pages: 819-835
• DOI: https://doi.org/10.1111/1467-8551.12171
• Public URL: http://researchrepository.napier.ac.uk/Output/2824301