Results

CEP discussion paper

Minimum wages and the nature of work

When minimum wage increases impose a cost shock on employers of low wage workers, there are a variety of ways in which firms can adjust. Rather than study the main focal point of much minimum wage research, possible labo...Read more...

CEP discussion paper

When do employers share? Rent sharing, monopsony and minimum wages

When firm productivity or product demand rises, workers typically share in the gains through higher wages or expanded employment. We show that for firms under monopsony with a binding minimum wage, this link from firm ga...Read more...

CentrePiece article

Return innovation: how migration shapes diffusion of new technologies

Novel products, processes and technologies are important drivers of economic growth. Davide Coluccia and Gaia Dossi show how migrants from Britain to the United States in the late 19th and early 20th century not only too...Read more...

Journal article

Journal of Economic Inequality:

Equivalence scales revisited: evidence from subjective data

Equivalence scales (ES) are widely used to compare income levels across different households. Yet the commonly used OECD and square-root scales rely on assumptions about household economies of scale that lack robust empi...Read more...

CEP discussion paper

Minimum wages and low wage workers: compliance as non-employment margin

This paper examines the impact of a substantial minimum wage increase in Uruguay - a middle-income developing economy - on wages and employment. Using administrative data and a difference-in-differences approach, we anal...Read more...

CEP discussion paper

Return innovation: the knowledge spillovers of the British migration to the United States, 1870-1940

This paper documents that out-migration promotes the diffusion of innovation from the country of destination to the country of origin of migrants. Between 1870 and 1940, nearly four million British immigrants settled in ...Read more...

Journal article

Economics & Human Biology:

Loneliness during the Covid-19 pandemic: evidence from five European countries

We use quarterly panel data from the COME-HERE survey covering five European countries to analyse three facets of the experience of loneliness during the COVID-19 pandemic. First, in terms of prevalence, loneliness peake...Read more...

Blog

Vox EU:

Rethinking pension reform: A new CEPR eBook

Population ageing is exerting unprecedented fiscal pressure on social security systems around the world. In response, many governments are implementing or planning pension reforms, often aimed at encouraging later retire...Read more...

CEP election analysis

Work, wages and inactivity

The recent aggregate performance of the UK labour market looks good. But aggregate performance often obscures important changes around averages. Inequality along several dimensions remains a persistent feature of the UK ...Read more...

CentrePiece article

The national minimum wage: 25 years on

It is now just over a quarter of a century since a national minimum wage was introduced in the UK. Once a source of controversy due to fears that it would lead to fewer jobs, the policy has instead proved to be highly su...Read more...

Blog

The Conversation:

Minimum wage for South African farm workers: study shows 2013 hike helped reduce poverty even though compliance was poor

Minimum wage policies are typically aimed at reducing poverty. Yet there is little direct evidence of this effect, especially in developing countries. And none for South Africa, write Ihsaan Bassier and Vimal Ranchhod....Read more...

Blog

LSE British Politics and Policy:

The national minimum wage - 25 years on

This month marks 25 years since a national minimum wage was introduced in the UK. Once a controversial policy, due to fears that it would lead to fewer jobs, it has instead proven to be highly successful. The minimum wag...Read more...

CEP discussion paper

Individual welfare analysis: a tale of consumption, time use and preference heterogeneity

How accurately does household income reflect the well-being of the individuals living within the household? Looking at household income does not take unequal consumption sharing within families, the value of time use (le...Read more...

CentrePiece article

The trouble with inactivity

Concerns about a recent rise in economic inactivity have prompted new policies aimed at discouraging early retirement and encouraging the labour force participation of women with young children. Stephen Machin and Jonath...Read more...

CEP occasional paper

The trouble with inactivity

Elevated concerns over the consequences of recent rises in the UK economic inactivity rate for growth, wages and prices have prominently featured in recent public debate about the labour market and the economy. This pape...Read more...

CEP discussion paper

The signaling value of legal form in debt financing

We examine if a startup's legal form choice is used as a signal by credit providers to infer its risk to default on a loan. We propose that choosing a legal form with low minimum capital requirements signals higher defau...Read more...

CEP discussion paper

Company wage policy in a low-wage labor market

We study how firms set wages for their employees when they can legally age discriminate across workers. We exploit an age-specific minimum wage change in the UK, which raised the minimum applying to workers aged 25 and o...Read more...

Blog

Economics Observatory:

Minimum wages and living wages: what happens in times of inflation?

It is widely accepted that minimum wages are an effective way to help workers at the lower end of the income distribution without damaging their job opportunities. But while the UK's minimum wage has risen faster than th...Read more...

Blog

LSE Business Review:

Low pay and insecurity in the UK labour market

Minimum wage increases have driven down the incidence of low hourly pay, but there has been much less progress elsewhere for low earners. Low pay is widespread among the self-employed, who do not benefit from the minimum...Read more...

CEP Insights

Jobs and wages

Most working-age adults depend on earnings from jobs as their main source of income. Understanding the labour market has always been a central part of research at CEP and its predecessor the Centre for Labour Economics....Read more...

Journal article

Journal of Political Economy:

Why does education reduce crime?

We provide a unifying empirical framework to study why crime reductions occurred due to a sequence of state-level dropout age reforms enacted between 1980 and 2010 in the United States. Because the reforms changed the sh...Read more...

Journal article

European Journal of Political Economy:

The generation gap in direct democracy: age vs. cohort effects

We document a generation gap in direct democracy outcomes across a wide range of topics that is causally related to aging. To this end, we combine different sources of postelection survey data covering more than 300 Swis...Read more...

Blog

LSE Business Review:

What is the optimal minimum wage?

With reports from the European Commission, the UK Treasury advocating significant increases in minimum wage levels, Gabriel Ahlfeldt, Duncan Roth, and Tobias Seidel explore whether such ambitious minimum wage increases i...Read more...

CEP discussion paper

Optimal minimum wages

We develop a quantitative spatial model with heterogeneous firms and a monopsonistic labour market to derive minimum wages that maximize employment or welfare. Quantifying the model for German micro regions, we find that...Read more...

Blog

VoxEU:

The value of online gig economy platforms

The gig economy and online labour platforms often trade off increased flexibility for lower employment security. Christopher Stanton and Catherine Thomas show how traditional labour market regulations, such as minimum wa...Read more...

CEP discussion paper

Minimum wages and the China syndrome: causal evidence from US local labor markets

Exposure to Chinese import competition led to significant manufacturing job losses in the United States. Local labor markets, however, differ significantly in how they fared with respect to manufacturing employment. An i...Read more...

CEP discussion paper

Living wages and age discontinuities for low-wage workers

This paper considers an emerging, highly policy relevant feature of minimum wages, studying what happens when a wage floor significantly higher than a nationally legislated minimum is imposed. The consequences of age-wag...Read more...

Journal article

Journal of Economic Perspectives:

The elusive employment effect of the minimum wage

Vacant, previously-developed land in cities can generate negative externalities on surrounding areas, and is often the target of policies to promote re-development. This paper provides estimates of the price sensitivity ...Read more...

Journal article

ILR Review:

Monopsony in labor markets: a review

Researchers? interest in monopsony has increased in recent years. This article reviews the accumulating evidence that employers have considerable monopsony power. It summarizes the application of this idea to explaining ...Read more...

CEP discussion paper

School indiscipline and crime

This paper studies the impact of compulsory schooling on violent behaviour and victimization in school using individual-level administrative data matching education and criminal records from Queensland (Australia). Explo...Read more...

Journal article

Journal of Population Economics:

Children, unhappiness and family finances

The common finding of a zero or negative correlation between the presence of children and parental well-being continues to generate research interest. We consider international data, including well over one million obser...Read more...

Journal article

Economics Letters:

The regional effects of Germany's national minimum wage

We show that the minimum wage introduced in Germany in 2015 led to spatial wage convergence, in particular in the left tail of the distribution, without reducing relative employment in low-wage regions within the first t...Read more...

CEP discussion paper

Why does education reduce crime?

Prior research shows reduced criminality to be a beneficial consequence of education policies that raise the school leaving age. This paper studies how crime reductions occurred in a sequence of state-level dropout age r...Read more...

CentrePiece article

Care homes: effects of the National Living Wage

The National Living Wage, which was introduced in 2016, has substantially raised wages at the bottom of the hourly wage distribution in care homes in England, a sector that employs a large number of low-paid workers. Acc...Read more...

CEP discussion paper

The generation gap in direct democracy

We provide the first systematic documentation and analysis of a generation gap in direct democracy outcomes across a wide range of topics using postelection survey data covering more than 300 Swiss referenda and four dec...Read more...

CEP discussion paper

Changing the structure of minimum wages: firm adjustment and wage spillovers

This paper analyses the economic impact of a significant change to the structure of a minimum wage setting policy. The context is the United Kingdom where government mandated an unexpected change in the structure of mini...Read more...

CEP discussion paper

The effect of minimum wages on low-wage jobs: evidence from the United States using a bunching estimator

We propose a novel method that infers the employment effect of a minimum wage increase by comparing the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it. Using st...Read more...

Journal article

Journal of Labor Economics:

Minimum wages and firm value

How does the value of a firm change in response to a minimum wage hike? The evidence we have to date is not well-suited to answer this question, principally because events that have been studied are not completely unknow...Read more...

Journal article

The Economic Journal:

Adjusting your dreams? High school plans and dropout behaviour

At the end of middle school, many low-achieving students realise that they do not have the ability to get into selective high school programmes, which may be a source of disengagement and eventually lead them to drop out...Read more...

Blog

ESRC blog:

How English care homes have coped with the National Living Wage

Giulia Giupponi is an ESRC-funded PhD student at the London School of Economics and a research assistant at the Centre for Economic Performance. Stephen Machin is Professor of Economics at the London School of Economics ...Read more...

Journal article

Science:

Inequality in mortality decreased among the young while increasing for older adults, 1990-2010

Many recent studies point to increasing inequality in mortality in the United States over the past 20 years. These studies often use mortality rates in middle and old age. We used poverty level rankings of groups of U.S....Read more...

CEP discussion paper

The elusive employment effect of the minimum wage

There is a huge body of empirical research on the employment effect of the minimum wage that has failed to clearly demonstrate the negative effect that so many economists strongly believe to find. This paper reviews the ...Read more...

CEP discussion paper

Minimum wages and firm value

How does the value of a firm change in response to a minimum wage hike? The evidence we have to date is not well-suited to answer this question, principally because events that have been studied are not completely unknow...Read more...

Journal article

American Economic Journal: Applied Economics:

The contribution of the minimum wage to US wage inequality over three decades: a reassessment

We reassess the effect of minimum wages on US earnings inequality using additional decades of data and an IV strategy that addresses potential biases in prior work. We find that the minimum wage reduces inequality in the...Read more...

CEP discussion paper

The youngest get the pill: ADHD misdiagnosis and the production of education in Germany

Attention Deficit/Hyperactivity Disorder (ADHD) is a leading diagnosed health condition among children in many developed countries but the causes underlying these high levels of ADHD remain highly controversial. Recent r...Read more...

CEP discussion paper

Informal care and the great recession

Macroeconomic downturns can have both an important impact on the availability of informal care and the affordability of formal long-term care. This paper investigates how the demand for and provision of informal care cha...Read more...

CEP discussion paper

All-star or benchwarmer? Relative age, cohort size and career success in the NHL

We analyze the performance outcomes of National Hockey League (NHL) players over 18 seasons (1990-1991 to 2007-2008) as a function of the demographic conditions into which they were born. We have three main findings. Fir...Read more...

CentrePiece article

Minimum wages: the economics and the politics

The UK?s national minimum wage has tackled extreme low pay ? but the wider problem of low pay remains as serious as ever. That is one of the conclusions of Professor Alan Manning in a discussion of the growing popularity...Read more...

SERC/Urban and Spatial Programme Discussion Paper

The Size Distribution Across All 'Cities': A Unifying Approach

Older cities in the US tend to be larger than younger ones. The distribution of city sizes is, therefore, systematically related to the country's city age distribution. We introduce endogenous city creation into a dynami...Read more...

CEP discussion paper

Minimum Wages and Wage Inequality: Some Theory and an Application to the UK

Research suggests that, at the levels set in countries like the US and the UK, minimum wages have little effect on employment but do have impacts on wage inequality. However we lack models that can explain these facts ? ...Read more...

CEP discussion paper

The Minimum Wage and Inequality - The Effects of Education and Technology

While there has been intense debate in the empirical literature about the effects of minimum wages on inequality in the US, its general equilibrium effects have been given little attention. In order to quantify the full ...Read more...

Journal article

The Economic Journal:

The crime reducing effect of education

In this article, we study the crime reducing potential of education, presenting causal statistical estimates based upon a law that changed the compulsory school leaving age in England and Wales. We frame the analysis in ...Read more...

CEP discussion paper

The Contribution of the Minimum Wage to U.S. Wage Inequality over Three Decades: A Reassessment

We reassess the effect of state and federal minimum wages on U.S. earnings inequality, attending to two issues that appear to bias earlier work: violation of the assumed independence of state wage levels and state wage d...Read more...

CEP discussion paper

Employment, Inequality and the UK National Minimum Wage over the Medium-Term

This paper assesses the impact of the National Minimum Wage (NMW) on employment and inequality in the UK over the decade since its introduction in 1999. Identification is facilitated by using variation in the bite of the...Read more...

SERC/Urban and Spatial Programme Discussion Paper

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

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 work...Read more...

CEE/Education and skills discussion paper

To Leave or Not to Leave? A Regression Discontinuity Analysis of the Impact of Failing High School Exit Exam

The high school exit exam (HSEE) is rapidly becoming a standardized assessment procedure for educational accountability in the United States. I use a unique state-specific dataset to identify the effect of failing the HS...Read more...

CEP discussion paper

Did the National Minimum Wage Affect UK Prices?

One potential channel through which the effects of the minimum wage could be directed is that firms who employ minimum wage workers could have passed on any higher labour costs resulting from the minimum wage in the form...Read more...

CEP discussion paper

To Leave or Not to Leave? A Regression Discontinuity Analysis of the Impact of Failing the High School Exit Exam

The high school exit exam (HSEE) is rapidly becoming a standardized assessment procedure for educational accountability in the United States. I use a unique state-specific dataset to identify the effect of failing the HS...Read more...

CEP discussion paper

Minimum Wages and Earnings Inequality in Urban Mexico. Revisiting the Evidence

This paper explores the contribution of the minimum wage to the well documented rise in earnings inequality in Mexico between the late 1980 and the late 1990s. In contrast to the view that sees minimum wages as an ineffe...Read more...

CEP discussion paper

Private Sector Employment Growth, 1998-2004: A Panel Analysis of British Workplaces

Using nationally representative panel data for British private sector workplaces this paper points to the importance of distinguishing between workplace and firm size when analysing employment growth, and finds that the ...Read more...

CEP discussion paper

Efficiency Wages and the Economic Effects of the Minimum Wage: Evidence from a Low-Wage Labour Market

We exploit a natural experiment provided by the 1990 introduction of the UK National Minimum Wage (NMW) to investigate the relationship between wages and monitoring and to test for Efficiency Wages considerations in a lo...Read more...

CEP discussion paper

Why Has the British National Minimum Wage Had Little or No Impact on Employment?

A century has passed since the first call for a British national minimum wage (NMW). That remarkable Fabian tract discussed wage setting, coverage, monopsony, international labour standards, inspection and compliance and...Read more...

CEE/Education and skills discussion paper

The Long Term Impacts of Compulsory Schooling: Evidence from a Natural Experiment in School Leaving Dates

This paper investigates a unique feature of the English educational system to estimate the causal effect of compulsory schooling on labour market outcomes. We examine school leaving rules that allow for discrete variatio...Read more...

CEP discussion paper

Minimum Wages and Firm Profitability

Although there is a large literature on the economic effects of minimum wages on labour market outcomes (especially employment), there is hardly any evidence on their impact on firm performance. This is surprising: minim...Read more...

CEP discussion paper

The Employment Effects of the October 2003 Increase in the National Minimum Wage

There is a growing body of research that measures employment effects of the minimum wage by using longitudinal data on individuals to compare job loss of workers affected by a minimum wage increase with those who are not...Read more...

CEP discussion paper

Has The National Minimum Wage Reduced UK Wage Inequality?

This paper investigates the impact on the wage distribution of the introduction, in April 1999, of the National Minimum Wage in the UK. Because of the structure of UK earnings statistics, it is not straightforward to inv...Read more...

CEP discussion paper

Minimum Wages and Employment

This paper investigates the effect of minimum wages on employment using a panel of US state-based data. We estimate a minimalist dynamic version of the specification implied by neo-classical theory. We find statistically...Read more...

CEP discussion paper

Union Decline in Britain

In this paper I consider the rapid decline in the unionization rate that has occurred in Britain since the late 1970s. An establishment based analysis reports that the overwhelming factor in explaining falling unionizati...Read more...

Journal article

Journal of Labor Economics:

The effects of minimum wages on employment: theory and evidence from Britain

Recent work on the economic effects of minimum wages has stressed that the standard economic model, where increases in minimum wages depress employment, is not supported by empirical work in some labor markets. We presen...Read more...