The Impact of a Rising Wage Floor on Labour Mobility across Firms

Citation

Forth J, Singleton C, Bryson A, Phan V, Ritchie F, Stokes L & Whittard D (2025) The Impact of a Rising Wage Floor on Labour Mobility across Firms. British Journal of Industrial Relations.

Abstract
In April 2016, the National Living Wage (NLW) raised the statutory wage floor for employees in the UK aged 25 and above by 50 pence per hour. This uprating was almost double any in the previous decade and expanded the share of jobs covered by the wage floor by around 50 per cent. Using a difference-indifferences approach with linked employer-employee data from the UK's Annual Survey of Hours and Earnings, we examine how the introduction and uprating of the NLW affected the likelihood of minimum-wage employees changing firms. We find some evidence that the NLW reduced the rate of job-to-job transitions among such workers, consistent with predictions that an increase in the wage floor discourages job search. However, we find no evidence that the NLW affected differences in job mobility between minimum wage workers and their co-workers in the same firm. Together, these findings suggest that the increased wage floor made quits less attractive to minimum-wage workers in firms with limited opportunities for progression.

Keywords
National Living Wage; On-the-job search; Low pay; UK labour market JEL Codes: J23; J38; J68; J88

Notes
First Version: July 17, 2024 This Version: June 3, 2025; The use of the ONS data in this work does not imply the endorsement of the ONS or data owners in relations to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. National Statistics follow consistent statistical conventions over time and cannot be compared to these findings. We thank Rachel Scarfe, Eduin Latimer, Abigail McKnight and participants at the 2023 Work and Pensions Economics Group Conference, 2023 Low Pay Commission Research Symposium, and 2024 Colloquium on Personnel Economics, for valuable comments. Lucy Stokes completed this research whilst employed at the National Institute of Economic and Social Research, UK. The authors have no interest or relationship, financial or otherwise, that might be perceived as influencing their objectivity. The data that support the findings of this study are openly available through the ONS (Office for National Statistics) Secure Research Service at http://doi.org/10.57906/x25d-4j96. The project involves the use of anonymised personal data and received ethical approval from the University of the West of England.