National Minimum Wage
National Minimum Wage
National Minimum Wage
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<strong>National</strong> <strong>Minimum</strong> <strong>Wage</strong><br />
62<br />
Figure 2.21: Productivity per Hour, by Selected Low-paying Industry, UK, 1998-2011<br />
Change on a year earlier (per cent)<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
-2<br />
-4<br />
-6<br />
-8<br />
1998 Q1<br />
1998 Q3<br />
1999 Q1<br />
1999 Q3<br />
2000 Q1<br />
2000 Q3<br />
2001 Q1<br />
2001 Q3<br />
2002 Q1<br />
2002 Q3<br />
2003 Q1<br />
2003 Q3<br />
2004 Q1<br />
2004 Q3<br />
2005 Q1<br />
2005 Q3<br />
2006 Q1<br />
2006 Q3<br />
2007 Q1<br />
2007 Q3<br />
2008 Q1<br />
2008 Q3<br />
2009 Q1<br />
2009 Q3<br />
2010 Q1<br />
2010 Q3<br />
2011 Q1<br />
2011 Q3<br />
Quarter<br />
Whole economy Wholesale and retail<br />
Food, drink and tobacco<br />
Hotels and restaurants<br />
Source: ONS, output per hour for the whole economy (LZVD); wholesale and retail (DJQ6); hotels and restaurants (DJR4); food, drink<br />
and tobacco (DJL3); quarterly, seasonally adjusted, UK, Q1 1998-Q3 2011.<br />
Research on Productivity<br />
2.110 In contrast to the availability of detailed information on individual earnings and employment,<br />
there is a lack of detailed datasets on individual firms. This has proved to be a substantial<br />
barrier for researchers wishing to investigate the impact of the minimum wage on<br />
productivity, prices and profits. Thus, the body of literature on the impact of the minimum<br />
wage on competitiveness is much thinner than on employment. However, a small number of<br />
studies have been able to investigate these issues using a variety of methods and data<br />
sources. Industry and plant-level data from the Annual Business Inquiry (ABI), the Annual<br />
Respondents Database (ARD) and Financial Analysis Made Easy (FAME) have generally been<br />
used. In addition, a couple of studies have generated their own data using a survey of care<br />
homes.<br />
2.111 For our last report we commissioned Croucher and Rizov (2011) who used FAME from<br />
1996-2009 and found that, in general, the NMW had a significant positive impact on<br />
aggregate productivity in the low-paying sectors. They found that the strongest positive<br />
productivity effects were in large firms while the smallest firms showed the weakest effects.<br />
Using the same data source but for an earlier period, Draca, Machin and Van Reenen (2005)<br />
had also found a positive association between the introduction of the minimum wage and<br />
productivity growth but it was not statistically significant.<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
-2<br />
-4<br />
-6<br />
-8
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