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Journal Article

The Effects of Minimum Wages on Wage Dispersion and Employment: Evidence from the U.K. Wages Councils

Stephen Machin and Alan Manning
ILR Review
Vol. 47, No. 2 (Jan., 1994), pp. 319-329
Published by: Sage Publications, Inc.
DOI: 10.2307/2524423
Stable URL: http://www.jstor.org/stable/2524423
Page Count: 11
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Effects of Minimum Wages on Wage Dispersion and Employment: Evidence from the U.K. Wages Councils
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Abstract

Using data on Wages Council coverage from the United Kingdom New Earnings Survey, the authors examine the impact of mandated minimum wages on wage dispersion and employment in the United Kingdom in the 1980s. They find evidence that a dramatic decline in the toughness of the regulation imposed by the Wages Councils through the 1980s-a decline, that is, in the level of the minimum wage relative to the average wage-significantly contributed to widening wage dispersion over those years. There is, however, no evidence of an increase in employment resulting from the weakening bite of the Wages Council minimum pay rates. Instead, consistent with the conclusions of several recent U.S. studies, the findings suggest that the minimum wage had either no effect or a positive effect on employment.

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