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Abstract for:

Minimum Wages and Schooling: Evidence from the UK's Introduction of a National Minimum Wage

Patricia  Rice,  May 2010
Paper No' SERCDP0050: | Full paper (pdf)
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Keywords: minimum wages; enrolment in schooling; natural experiment approach

JEL Classification: J22; J24; J38

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: SERC Discussion Papers
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Abstract:

This paper uses the introduction of the national minimum wage in the UK in April 1999 as a ‘natural experiment’ to analyse the impact of minimum wages on enrolment in schooling. At the time of its introduction, only workers aged 18 years or more were covered by the legislation. The paper uses panel data for a sample of young people in a given school-year cohort, some of whom were aged 18 years in spring 1999 and therefore eligible to receive the national minimum wage, and others who were aged only 17 years. We compare participation in post-compulsory schooling for the two groups, both before and after the enactment of the legislation and find robust evidence that eligibility for the national minimum wage significantly reduces the probability of participation in post-compulsory schooling for young people living in areas where the national minimum is high relative to local earnings.