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The National Minimum Wage and the Substitutability between Young and Old Workers in Low Paid Occupations
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.ORCID iD: 0000-0001-9244-7018
2016 (English)In: Manchester School, ISSN 1463-6786, E-ISSN 1467-9957Article in journal (Refereed) Epub ahead of print
Abstract [en]

We study the effect of the National Minimum Wage (NMW) on theworkforce age composition within the low paying sectors of the Britisheconomy. Our interest is in the degree of substitutability betweenlabour inputs (young and old employees). We find evidence that boththe introduction and the regular upratings of the NMW have a significanteffect on the observed changes to the relative wages and tothe relative wage bills but not to relative employment. We estimatethe elasticity of substitution, between “young” age groups and olderworkers (55+) to be zero, while that of “prime” (22+) age and olderworkers, to be around 0.79. Our estimates therefore imply significantcomplementarity between younger and old employees.

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Keyword [en]
labour substitution, minimum wages
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URN: urn:nbn:se:umu:diva-121165DOI: 10.1111/manc.12168OAI: diva2:931402
Available from: 2016-05-27 Created: 2016-05-27 Last updated: 2016-08-04

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Lanot, Gauthier
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