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Legal minimum wage rates for young workers were introduced in The Netherlands in 1974. After substantial increases during the 1970s, youth minimum wages were lowered in the 1980s, in response to the large increase of youth unemployment. Analyses the employment effects of lowering youth minimum wages. Looks at macro and micro evidence. At the macro level, does not find convincing evidence of negative effects of youth minimum wages on youth employment. Constructs a micro model in which an individual′s labour market state can be affected by the sign of potential earnings minus the relevant minimum wage. The model is estimated with data from 1984 and 1987. Finds significant minimum wage elasticities of employment and unemployment, with expected signs.

Using a large panel of employees from the New Earnings Survey, examines the subsequent earnings transitions of those who were in the lowest quintile of the earnings distribution in 1976. Traces the quintile earnings positions in 1984 and 1991 of three age groups of 1976 – the young, the prime‐aged, and older workers. Presents and analyses transition probabilities for each group, and contrasts the experience of men and women in terms of the incidence of low pay and its persistence. Also examines the previous locations within the earnings distribution of those who were low paid in 1991.

Presents a theoretical approach to analysing the effects of minimum wages on employment which is intended to conform more with the functioning of actual labour markets than do other popular models traditionally used to analyse the likely effects of minimum wages on employment. The model has the desirable property of not only allowing for the negative effect predicted by conventional models, but also permiting a non‐negative impact which is consistent with several recent empirical pieces of work. Examines the employment effects of the industry‐level system of minimum wages which operated in the UK until September 1993. Results reported are not in line with the orthodox model as they suggest a neutral or positive impact of Wages Council minimum wages on employment between 1978 and 1990.