In this ongoing project, MiSoC Co-I Susan Harkness and MiSoC researcher Silvia Avram examine how the recent substantial increases in the minimum wage – and especially the introduction of the National Living Wage in 2016 – contributed to changes in the gender pay gap across the wage distribution.
Since its introduction in 1999, the minimum wage increased considerably both in real terms and relative to average earnings. There is now solid evidence that the higher minimum wage contributed to smaller pay differentials at the bottom of the distribution, benefiting not only minimum wage workers but also those who were slightly better paid (Avram & Harkness, 2019).
Women are disproportionately more likely to find themselves in low pay and to be receiving the minimum wage hourly rate. As a result, they are more likely to benefit from minimum wage increases. Yet, previous studies have found no or only a very limited impact of minimum wage increases on the gender pay gap in the UK (Robinson, 2002; Bargain et al., 2019). Nevertheless, these studies analyse the introduction of the minimum wage when rates were much lower and they mostly focus on gender differentials between workers on average pay. In this study, the MiSoC researchers plan to complement the existing evidence on minimum wages and the gender pay gap by examining more recent data when minimum wages were substantially higher and affected a significantly higher share of workers. The project will make use of Recentred Influence Function decomposition techniques to examine the impact on the gap not only at the mean but in various parts of the wage distribution.