Review of international evidence on minimum wages
20 March 2019
The Low Pay Commission has welcomed the announcement at Spring Statement that a review of the international evidence on the impacts of minimum wages is to be undertaken.
Professor Arindrajit Dube has been appointed to conduct the review; the terms of reference for which are as follows:
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The objectives of the office holder are: to review the international evidence on the impacts of minimum wages, with a particular focus on innovative and ambitious minimum wage models; and to consider the role of individual labour market characteristics in determining such effects. The review should consider the implications for UK minimum wage policy, in particular assessing whether the employment effects of minimum wages in the UK could be different to other countries, given differences in labour market characteristics.
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The office holder will draw on wider expertise in labour market economics, including through engagement with other academics and the Low Pay Commission. The review will consider the latest evidence on minimum wages internationally, the potential impacts on employment (volume and structure), productivity and economic growth, the ability of the labour market to absorb future minimum wages rises, and the wider macroeconomic context.
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In particular, the office holder will be asked to consider the implications for future minimum wage policy in the UK, bearing in mind the aspirations the government set out in Budget 2018, to end low pay in the UK.
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The review will not attempt to consider the structure of minimum wage rates in the UK (e.g. youth rates) nor the causes of low wage employment.
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Its conclusions will inform work underway in HM Treasury and the Department for Business, Energy and Industrial Strategy considering the future remit of the Low Pay Commission after 2020. This wider work will include broad consultation with a range of stakeholders.
Chair of the Low Pay Commission Bryan Sanderson said:
“We welcome the Chancellor’s announcement. It’s good news to have such a respected expert supporting our work on the post-2020 NLW path.
The LPC will be engaging with the Government over the coming months on our post-2020 remit, to help shape the remit and make sure it reflects what we know about the effects of the NLW so far.”