StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

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) Cite this document
Summary
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 paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.2% of users find it useful
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
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Explain how the introduction of a minimum wage may affect the level of Essay”, n.d.)
Explain how the introduction of a minimum wage may affect the level of Essay. Retrieved from https://studentshare.org/macro-microeconomics/1461010-explain-how-the-introduction-of-a-minimum-wage-may
(Explain How the Introduction of a Minimum Wage May Affect the Level of Essay)
Explain How the Introduction of a Minimum Wage May Affect the Level of Essay. https://studentshare.org/macro-microeconomics/1461010-explain-how-the-introduction-of-a-minimum-wage-may.
“Explain How the Introduction of a Minimum Wage May Affect the Level of Essay”, n.d. https://studentshare.org/macro-microeconomics/1461010-explain-how-the-introduction-of-a-minimum-wage-may.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Explain how the introduction of a minimum wage may affect the level of employment in theory. Examine and critically assess the e

International Trade Theory

 Further to this, it is also believed that international trade can bring substantial economic welfare to the countries however still most of the countries do not view it as a favorable thing. Despite having a very promising and bright outlook, international trade has been largely viewed with suspension and it is because of this that governments impose barriers to restrict international trade. There can be many reasons behind this act of imposing restrictions or blocking international trade however there are also benefits on the other side too.

International trade has driven the attention of many of the brilliant minds in economics therefore the origins of the economic theory on international trade owe much to the c...
6 Pages(1500 words)Case Study

Do Violent Video Games Affect Behaviour

Video games are all kinds that are famous between children and adolescents on the basis of their usage of enhanced technology and diversity. People have shown interest in all kinds of video games and violent games are one of them (Anderson, Gentile and Buckley 2007). Gentile and Anderson inform in their work, “Violent Video Games: The Effects on Youth and Public Policy Implications” that parents pay a little attention to children’s usage of violent video games. According to them, the parents stop their children to stay away from all kinds of violence but their attitude towards the violence in media and video games is negligible (Gentile and Anderson 2006).
Freedman informs in his article, “Evaluating t...
7 Pages(1750 words)Assignment

How Does the US Media Effects Evolve in Singapores Current Media

Lewis and Slade (2000, p. 223) in their critical evaluation of the effects of media communication on the audience argue that media effect is achieved incongruent with social context. Their study recounts the experiment on the influence of television on identity in Singapore indicates that US social values and Singaporean values greatly differ from each other. The sharp differences in program content have a negative influence on the audience because Chinese raised Singaporeans value marriage, social values, and collectivism whereas US social culture involves career, family and the struggle to balance the two. Therefore the question of US media's influence to destabilize Singaporean national identity is limited. This view is emphasi...
6 Pages(1500 words)Assignment

How to Choose the Right Job

In a research that was conducted by the London School of Economics in 2005 – 2006, it has been seen that almost 61.6% of the students worked after graduation (LSE, 2008). According to Little (2007), the link between high education and employment is very high.

“Employability is a set of achievements – skills, understandings, and personal attributes – that make graduates more likely to gain employment and be successful in their chosen occupations, which benefits themselves, the workforce, the community, and the economy” (Little, 2007)

The research highlighted the strong points that are developed by students and the percentage of skills that are developed post-high education program...
6 Pages(1500 words)Research Paper

How Tomatoes Can Help Your Heart

Whether tomato is a fruit or vegetable? Well, this question can be answered in both ways. Botanically, tomato is a fruit but it is so frequently used as a culinary item all over the world, it is also considered as a vegetable. Long time back, the tomato was considered as fruit and helped the exporters to avoid taxation but 1893 the Supreme Court put an over this dispute by declaring that tomato was a vegetable and since that time onwards, tomatoes were taxed accordingly. Keeping in harmony with this tradition, till date tomatoes are served as entrée and very rarely as dessert. Apart from side dishes, wide array of main course dishes are also prepared from tomatoes and these dishes are regarded considered as lip-smacking cui...
6 Pages(1500 words)Case Study

Emergency Economic Stabilization Act of 2008 and How It Has Impacted the Financial Markets

Though there were objections from various quarters about the huge amounts of tax payer’s money being used in the bailout of huge corporates, the Act has been successful in moving the downturn towards a flat point and now has started slowly moving towards a recovery stage. The various programs under the EESA 2008 have played a significant role in the financial sector, housing mortgage, and banking institutions to save the institutions from complete disaster.

The Emergency Economic Stabilization Act is a huge taxpayer bailout designed to rescue the financial sector. The amount of money to be used is around $700 billion or $2000 per American citizen (Public mark up). Emergency Economic Stabilization Act of 2008 is al...
10 Pages(2500 words)Research Paper

Free Cash Flows Theory

These are not hard and fast rules in determining the capital structure which should best affect a firms value. These theories lay down the benefits and the costs when a firm chooses what it sees as an adequate mix to maximise the shareholders value.

One of the implications where this research can lead include the possibility of the effectiveness in maximising shareholder value by employing two or more theories in capital structure decisions. Because these theories are more conditional by nature, probing which combinations when used for capital structure decisions are more effective in arriving at the goal of maximising firm value can be another subject for further research.
The role of capital structure in increasi...
11 Pages(2750 words)Case Study

The Level of Profitability of Gulf Cooperation Council Banks

... Framework is a structured analysis method used in accounting theory to trace the sources and comparative levels of revenues and expenses that ultimately determine profitability. The terminology is slanted towards the even of decreasing profitability, in order to establish the directionality of the various components of revenues and expenses. The framework takes the form of a tree diagram, and the various component accounts are decomposed into their subcomponents in order to determine the ultimate source of inefficiency in the bank’s operations that adversely affects its profitability. The model may, naturally, be used to depict the event of increasing profitability, with the indicated directions for each component or sub-component...
13 Pages(3250 words)Case Study

Validating Late Mover Advantages in e-commerce: Evidence from Selected Companies

The market dynamics have been drastically changed over the years as marketing and selling over the internet has become an integral part of business strategies. The changing trends in the consumer behavior and attitude towards shopping at their own ease have pushed businesses to rethink their strategies and approach the business in an entirely new way to which they may not be accustomed to. E-commerce poses greater challenges for companies to change and adapt to the needs of the disequilibrium that is continuously created within the online market space. The challenges faced by the companies are in the form of “weak intellectual property rights, technical interdependence, technical uncertainties, and rapid technical innovation...
12 Pages(3000 words)Research Proposal

Management Theory and Practice in the Early Childhood Education Industry

... likely that some employees in this sector could be laid off, which adversely affects their motivation. Despite public sector cuts, it may be possible to adopt alternatives such as transferring some employees into part time employment, or reducing their wages but retaining them nevertheless. Applying Taylor’s Scientific theory of management, it would be the efficiency of the working methods which would be the most important (Taylor, 1911). Taylor observed the “soldiering” phenomenon among workers, whereby they sought excuses and devised ways to work much slower or to skive off work altogether and avoid doing it. When dealing with young children and facing difficulties in handling them, workers need to have a lot of patience. In some...
6 Pages(1500 words)Coursework
sponsored ads
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.

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