The National Minimum Wage and Hours of Work: Implications for Low Paid Women*

Abstract

The largest group of beneficiaries from the introduction of the National Minimum Wage in the UK were women working part-time. A potential threat to these wage gains is a reduction in the working hours available, with parttime (flexible) jobs particularly vulnerable. This paper reports a range of difference-in-difference estimates using individual-level data from the New Earnings Survey and the British Household Panel Survey. No significant changes in hours worked by either full-or part-time women are found 1, 2 and 3 years after the NMW, and no change in the probabilities of remaining in full-or part-time work or transiting between the two.

Why has the British National Minimum Wage had Little or No Impact on Employment?

“…They conclude that the NMW "led to a reduction in paid working hours of both male and female low wage workers". Connolly and Gregory (2002) analyse the consequences of the introduction of the NMW for average weekly hours worked by women aged 22-59. Women, especially those working part-time, were the main beneficiaries of the NMW (LPC 1999(LPC , 2000.…”

Dealing with monopsony power: Employment subsidies vs. minimum wages

“…While most studies find a fall in hours per worker in response to a minimum wage, there is some conflicting evidence on the direction of the change. Notwithstanding this almost all studies find considerable variation in hours per worker; see Neumark et al(2000b), Couch and Wittenberg (2001), Zavodney(2000), or Katz and Krueger (1992) for the U.S., Stewart and Swaffield (2004) or Connolly and Gregory (2002) for the U.K, Nolan et al (2002) for Ireland, or Strobl and Walsh (2002) for Trinidad and Tobago.…”

The ambiguous effect of minimum wages on hours

“…Similarly, Zavodney (2000) using a panel of US states finds a fall in the number of workers but increase in hours. Connolly and Gregory (2002) found no effect on hours for women from the national minimum wage in the U.K;. The literature indicates that there is there little evidence that hours remain fixed in response to a minimum wage, and that additionally for hours per worker the direction of the impact is not clear-cut.…”

“…Hamermesh (1993) develops a model that deals with the firm's choice of workers and hours in a cost minimisation framework (similar to that illustrated in Figure 2 below) which includes a brief discussion of minimum wages, while Michl (2000) outlines a model where firms with a Cobb-Douglas production function over hours and workers choose workers and hours to minimise cost, assuming that the wage does not increase with hours. Other studies, such as Stewart and Swaffield (2006), Zavodney (2000), Neumark and Schweitzer (2000), and Connolly and Gregory (2002) contain some general discussions on how mimimum wages are related to hours but do not build a formal theoretical model.…”