The Impact of the National Minimum Wage in Low-Wage Sectors : Does the Earnings Top-Up Evaluation Study Add to Our Understanding?

Recent work investigating the possible impact of the introduction of the UK National Minimum Wage (NMW) in April 1999 has focused on the analysis of care homes, a sector particularly associated with low-wage employment. In this article we attempt to add to these findings by utilising the Earnings Top-up Evaluation (ETUE) survey which was carried out in 1996, 1997 and 1999, and aimed to over-sample establishments operating in low-wage sectors. Initially, we utilise the panel element of the ETUE to carry out a similar analysis to that adopted for the care homes data. However, in addition to this establishment-level analysis, we also utilise information on wages and employment in three non-managerial skill groups, within this panel of establishments, to carry out an analysis at the level of the skill group. In this second set of analyses we are able to reject the null hypotheses of parameter insignificance, identifying a negative employment effect of the 1999 NMW, although this is only true of one of our indicators of NMW impact and its magnitude is small. In the conclusion to the article, we discuss our results in light of the findings from other similar studies