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The UK National Minimum Wage's Impact on Productivity

Rizov, Marian; Croucher, Richard; Lange, Thomas


Marian Rizov

Richard Croucher

Thomas Lange


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.

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
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The UK National Minimum Wage's Impact On Productivity (329 Kb)

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Copyright Statement
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.

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