"This study uses large-scale individual employee survey data, with a unique job change variable, which identifies the employer of the individual. This enables investigation of individuals both in terms of their own characteristics but also in terms of their firm's characteristics. Focusing on those paid at or near the minimum wage, analysing firm behaviour allows an assessment of how changes in the minimum wage affect (a) the price of a job, and (b) companies' decisions to set wages. Evidence shows that employers are willing to absorb the extra labour cost associated with increases in the minimum wage and set relatively competitive wages, at least at the low end of the labour market."

Support: Paper