We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Explain how the introduction of a minimum wage may affect the level of employment in theory. Examine and critically assess the e - Essay Example

Comments (0)
Minimum Wage Rates The Impact on Employment Levels The economics are best said to be in equilibrium when the market forces determine the prices, and the quantity supplied and demanded. This means that if the factors are not influenced, then there is bound to be equilibrium in the economy in the long run…
Download full paper
Explain how the introduction of a minimum wage may affect the level of employment in theory. Examine and critically assess the e
Read TextPreview

Extract of sample
Explain how the introduction of a minimum wage may affect the level of employment in theory. Examine and critically assess the e

Download file to see previous pages... When the government enforces the laws of minimum wages, then the market forces are disturbed and equilibrium ceases to exist creating a gap between the demand and supply, which is of labor in this case. The disequilibrium in theory results in a rise in the supply of labor but the demand reduces as the labor is now more costly. However, the magnitude by which this disequilibrium is caused depends upon the circumstances prevailing in each economy and varies from country to country which we will see later. The diagram to the right shows the labor market curve. When the market forces were independent and not disturbed, the market was in equilibrium that is the supply and demand curve intersected at a point which is known as the equilibrium point represented as L0 with the quantity of labor and W0 as the equilibrium wage rate. However, the market forces were disturbed and the minimum wage rate was introduced with the representation of Wmin. This created disequilibrium in the economy and the supply and demand curves no longer intersect at the equilibrium point. There now is a gap between the demand and supply of labor which is equivalent to L2-L1 and this is the excess labor which is not required. Since the employment has gone down from L0 to L1, this shows that the implementation of a minimum wage policy results in a decline in unemployment in an economy. Several economists and business owner, small businesses in particular, have voiced their concerns that minimum wages will result in a rise in unemployment. The worst aspect of this rise in unemployment is the fact that the people who will be most affected are the poor people who are not too educated. When the minimum wage policy will be implemented, the costs of hiring on part of the employers will rise and they will be forced to wither cut the current staff or freeze their hiring programs. They think that the poor and uneducated people will be most affected since the policy is affecting only them. The educated or wealthy people are already employed on jobs at higher management levels and their current wages or salaries are nowhere near the minimum wages. It is the lower level staff whose wages are affected and hence the employers will be forced to take action against these employees. However, a liberal think tank with the name of Economic Policy Institute have conducted a research and it has suggested that there is little evidence to suggest that there is more or less no difference in the employment levels between states in America in some industries even though there is a difference in the minimum wage rates among the states. This suggests that the impact of an introduction of minimum wage policy is dependent upon other factors as well that is industry to industry in this case. This suggests that a minimum wage policy may not have such a significant impact as economists have previously suggested. As a matter of fact, it may even increase employment in some cases because the workers were actually being paid less than the worth of revenue and profits that they were contributing to the firm economically. The findings have gone as far as suggesting that rather than creating disequilibrium in the market as a result of minimum wages, it may even help the market to come nearer to the equilibrium level by forcing the employers to pay a fairer wage to the employees. Furthermore, the employers always have the choice of reducing the supervision, training, and recruitment costs in order to balance ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Minimum Wage
At first sight minimum wage seems to be helping the employees; however there are many controversies associated with minimum wage. Proponents argue that minimum wage would prevent employers from exploiting the employees and it will help the employees to reduce their poverty level and increase their living standards.
4 Pages(1000 words)Essay
Minimum Wage
From a microeconomics perspective, there is enough supporting evidence that minimum wage increases maintain negative outcomes to the economy. In similar accord, thinking from a macro perspective, minimum wage increases create similar negative economic conditions.
5 Pages(1250 words)Essay
The Minimum Wage Law
The New Deal legislation that had the ideal of providing a living wage for all workers has gone unfulfilled, as the wage is still far below the federal standard for poverty. However, advocates of the law argue that it does give the worker some level of protection against the exploitation of greedy businesses.
6 Pages(1500 words)Essay
Minimum Wage
Almost all the countries in the world have similar kind of minimum wage laws and legislation. Minimum wage legislation may be interpreted as making it either unlawful for employers to pay workers less than the minimum wage, or unlawful for workers to provide labor or services for less than the minimum.
2 Pages(500 words)Essay
National Minimum Wage Essay
In that respect it used to stand out from other European countries. France, the Netherlands, Luxembourg, Spain and Portugal have national minimum wages set by the government. The Scandinavian countries along with Belgium and Greece have a national minimum wage set by collective bargaining.
6 Pages(1500 words)Essay
Minimum Wage Law
This circumstance has resulted in a polarization of opinion between economists, politicians, employers, social activists and the general public as well. Legislators passed this depression-era law
12 Pages(3000 words)Essay
Using labour market theory, analyse how policies implemented over 2012/13 reducing benefits and making the labour market more flexible will affect the wage and employment
An employee with moveable ability will be capable to shift effortlessly from one profession to any other. Flexibility as a wide financial scheme is basically the capability to counter the financial variance proficiently & speedily whilst
1 Pages(250 words)Essay
Minimum wage
As such, individuals operating such daycare centers face diverse challenges and they ought to overcome them, in a bid to run their affairs smoothly. Such challenges include funding and space. This manuscript will mull over
3 Pages(750 words)Essay
Minimum Wage
However, it seems there is no common ground where all parties believe that the public will benefit from any available option. Minimum wage is the lowest form of remuneration that an employee can
2 Pages(500 words)Essay
Minimum Wage
Minimum wage is usually enforced by law after a lot of consultation and deliberation has been done with relevant stakeholders and partners (Brown, Gilroy & Kohen, 1982). The question of whether to raise the minimum
3 Pages(750 words)Research Paper
Let us find you another Essay on topic Explain how the introduction of a minimum wage may affect the level of employment in theory. Examine and critically assess the e for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us