Low Pay Commission Call for for Research on the impacts of changes to the National Minimum Wage, including the National Living Wage, on household incomes

The Low Pay Commission (LPC) invites tenders from researchers to identify and assess the impacts of changes to the National Minimum Wage, including the National Living Wage, on household incomes.

This project aims to further our understanding of the link between the NMW/NLW and living standards for households. It should also provide us with the capability of taking the project forward in future years.

The project should quantify how possible future changes in the NMW and NLW will affect the distribution of household income, having accounted for the position of NLW and NMW recipients in the income distribution, the importance of earnings from the NMW and NLW to those households, and the way that the tax and benefit system responds mechanically to increases in earnings of NMW and NLW recipients.

It should also enable the Low Pay Commission to conduct these analyses in future years. The LPC need to know how a given headline increase in the NMW/NLW affects household incomes. But the link between a headline increase in the NMW/NLW and the disposable income of the households containing NMW/NLW workers is complicated. As previous work has highlighted, the impact of an increase in the NMW/NLW on the income distribution depends on a) where NMW/NLW workers are in the household income distribution b) the importance of earnings from NMW/NLW to these households and c) the way that the tax and benefit system mechanically responds to a higher NMW/NLW (i.e. the marginal effective tax rate facing NMW or NLW workers). This project should attempt to quantity these three factors in detail.

Understanding these aspects more clearly should help the LPC make better‐informed decisions about the future of the NLW, as well as about the level of the NMW. As there are a variety of circumstances among NLW households, assessments for different groups within the population should also be included. This could be classifying NLW households according to, for example, the number of adults; the presence, number and age of dependent children; the age of the adults; and the region of residence, as well as the position in the income distribution.

The LPC invites tenders for research that will provide insights by 4 September 2025 (at the latest) and the ability to assess changes in time for our deliberations in October 2025. These findings will also contribute to the knowledge base that will provide the evidence for Commissioners in deliberations about the future of the NLW beyond 2025.

The full requirement is set out in Schedule 07 of this Invitation to Tender (LPC2024/02). Further information can be found on our website https://www.gov.uk/government/publications/low-pay-commission-call-for-research-2025

You must submit your tender to tim.butcher@lowpay.gov.uk. It must arrive no later than 14:00 on 10 February 2025.