Does the Minimum Wage Impact Labour Market Choices of Young People aged 16 to 24?

Funder: Low Pay Commission [LPC]

April 2018 – December 2018

This LPC-funded project uses LEO data to investigate the extent to which minimum wages impact the outcomes and choices of young people as they enter the labour market. This is the first ever study of minimum wage impacts using LEO data and will inform the deliberations of the LPC on their decisions over the level of National Minimum Wage (NMW) and National Living Wage (NLW).

Final Report

Bowyer, A., Cerqua, A., Di Pietro, G., Gorman, E., & Urwin, P,. (2019) Assessing Factors that Affect the Labour Market Decisions of Young People aged 16 to 24: Research Informing LPC Review of Youth Rates [PDF]

Impact

This report describes the findings from three strands of investigation:

• Evaluating the impact of local labour market conditions on the employment and education decisions of young people. This first statistical investigation uses Longitudinal Education Outcomes [LEO] administrative data, to update the analysis previously carried out by Crawford et. al. (2011) using the Longitudinal Study of Young People in England (LSYPE).
• Identifying impacts arising from the introduction in April 2016 of the National Living Wage for those aged 25 and over, and the 21 to 24 year old rate. The second strand of statistical work uses LEO data to initially pursue a similar Regression Discontinuity Design [RDD] to that used in existing studies (Crawford et. al, 2011; Dickens, Ruley and Wilkinson, 2014), but then departs from this method, as key assumptions for its validity are not met. 
• The third strand of research reviews the major policy trends that have altered the context for consideration of NMW youth rates between 1999 and 2019; and describes what these changes might imply.