The Effects of Minimum Wages on Employment: Theory and Evidence from Britain

Since the abolition of the Wages Councils in September 1993, agriculture is the only sector in the UK economy covered by any form of minimum wage legislation. This paper investigates the impact of the system of minimum wages on the level and structure of earnings and employment in agriculture. On wages, our main conclusion is that the minimum wages set by the AWBs are important determinants of the average level and distribution of earnings in UK agriculture. On employment, our main conclusion is that there is no evidence that minimum wages have reduced the level of employment in agriculture. If anything, our estimates imply a weak positive impact of minimum wages on employment. There are no significant differences between men and women.