TY  - RPRT
        AU  - Xu, Lei
AU  - Zhu, Yu
        TI  - Does the Employment Effect of  National Minimum Wage Vary  by Non-employment Rate? A Regression Discontinuity Approach
        PY  - 2022/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 15345
        UR  - https://www.iza.org/publications/dp15345
        AB  - We examine the impact of increasing minimum wage on employment by exploiting variation in the age-dependent National Minimum Wage (NMW) in the UK. We extend the Regression Discontinuity model to evaluate the procyclicality of employment effect and show that previous estimates may be biased due to failure to account for the local non-employment rate. Contrary to the existing literature, we report a positive employment elasticity after accounting for the effect of local labour market conditions. The results suggest that the positive employment effect of increasing minimum wage is strongly procyclical, i.e. is more pronounced in areas with low non-employment rates. Under an assumption that employers have no direct impact around the cut-off point, the results suggest that a higher minimum wage increases labour supply of young workers.
        KW  - minimum wage
KW  - macroeconomic fluctuation
KW  - regression discontinuity
KW  - age dependent
KW  - procyclicality
        ER  -