The Impact of the National Minimum Wage on Labour Productivity in Britain


We examine labour productivity in low-paying sectors of the British economy and find that productivity was positively affected by the national minimum wage’s (NMW) introduction. We calculate firm-specific labour productivity measures and then aggregate them to the level of low-paying sectors. Difference-in-differences analysis shows that – with notable exceptions – aggregate low-paying sector productivity has been significantly and positively affected by the NMW. Effects’ magnitudes vary by sector and firm-size group over time.

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