Advantage & Disadvantages of Minimum Wage

In: Business and Management

Submitted By buzzbuzz
Words 2611
Pages 11

Minimum wage refers to the lowest hourly, daily or monthly wage an employee is legally entitled to when working. Minimum wage is in effect in a range of different jurisdictions with differences in the views on the advantages and disadvantages being disputed by people. Supporters claim minimum wage increases the standard of living for workers whilst reducing poverty. Opposite views are that if it is high enough to be effective then it increases unemployment, particularly among workers who are inexperienced or handicap, thus harming the lesser skilled workers to benefit the better skilled workers
The effect on employment rates due to minimum wage rates is a highly contested policy within economics. The introduction of minimum wage into the market can lead to competitive employers cutting employment; this depends on the rate of the wage rises require to comply with the current minimum wage according to the “standard textbook model”. Other models have also been suggested in which a decline in the employment rate may not occur and in fact employment may increase.
During my research I found a wide range of literature on minimum wages, particularly on the effects of a minimum wage policy in place. Though a lot of informative research was concluding I also found the argument between weather the effects and positive of negative on employment, both sides of the disagreement present a large amount of information supporting the theories. Research before the 1990’s mostly seemed to be based on a series of estimations and teenage employment figures, though after the 1990’s the research was conducted different results have arose, on one hand claiming that there is a growing body of research that found no negative effects but only positive for minimum wage and others claiming finding of significant negative effects, thus the effects on employment rates due to…...

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