The impact of the UK national minimum wage on productivity by low-paying sectors and firm-size groups: report to the Low Pay Commission.

Previous research has found little evidence of any impact by the minimum wage on labour or total factor productivity. This report investigated the longitudinal impact on productivity by size of firm. Detailed financial information using the FAME dataset was used to analyse impacts on total factor productivity since the minimum wage’s introduction. In general, it is found that the National Minimum Wage had a significant positive effect on aggregate productivity in low-paying sectors. The strongest effects were in larger firms; small firms showed weaker effects. This may be explained by larger firms greater ability to use monopoly power and also to reorganise their productive processes.

Project report referenced in Low Pay Comission's Annual Report 2011.