This is an income policy.

The national minimum wage is the lowest wage rate that an individual can receive when working - based on certain conditions. The national minimum wage rate is targeted to the lowest income earners. Consequently, an increase in the national wage will increase gross earnings of this income group, and increase household disposable income, so reducing a determinant of child poverty.

Disclaimer Statement

Note the following is a very broad statement that has been used for educational purposes. The actual relationship may not hold due to the complexities of the issues. Therefore, it should not be taken literally.

The problems with this policy stem from concerns on how well focussed the policy is, and the wider implications on government policy.

• The effectiveness depends on whether those households who are suffering from child poverty have a member who is working at the national minimum wage level.
• Outside the issue of Child Poverty, an increase in a national minimum wage may increase labour costs, unemployment and inflation.

The national minimum wage rate is set in the model at £3.60 (for up to date information on the National Minimum Wage see the Inland Revenue Web site. The input parameter in the model can range between Abolish It and £5.00 per hour

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