A analysis of minimum wage

Moreover, the subsidies depend on family income, thus creating incentives precisely for the families most in need of help. Thus, attention should be paid to the best studies; even if researchers do not yet agree on which studies are best, it is more meaningful to try to resolve this question than to mechanically average across existing estimates in the literature.

The implication is that minimum wages may have little impact on earnings of affected workers, on average. This challenge is also reflected in the UK studies.

minimum wage in india

Research for the US generally fails to find evidence that minimum wages help the poor, although some subgroups may be helped when minimum wages are combined with a subsidy program, like a targeted tax credit. Some workers, most likely those whose previous wages were closest to the minimum, will enjoy higher wages.

The employment declines might not appear to be large, even if the disemployment effect among the least-skilled workers is strong. In addition, elasticities estimated from most existing minimum wage studies overstate the wage gain, because they are computed in terms of the legislated increase in the minimum wage;however, typically, some affected workers are already earning more than the old minimum wage but less than the new minimum wageso the size of the average wage increase for them will be smaller than the minimum wage increase itself.

More important, even if one has a strong view of what the US literature says about the employment effects of past minimum wage increases, the literature on past increases may provide much less guidance in projecting the consequences of the high minimum wages that are now emerging, which will entail much larger increases than those studied in the prior literature.

minimum wage wiki

So can international public opinion, by pressuring multinational companies to pay Third World workers wages usually found in more industrialized countries.

Absent variation in minimum wages across regions in the UK, one recent study examines groups differentially affected by the national minimum wage, finding employment declines for part-time female workers, the most strongly affected group.

minimum wage definition economics

Studies focusing on the least skilled were highlighted, as the predicted job reduction effects of minimum wages were expected to be more evident in those studies.

A number of economists for example Pierangelo Garegnani[44] Robert L.

Minimum wage history

In contrast, few—if any—studies provide convincing evidence of positive employment effects of minimum wages. Therefore, since a non-covered sector exists nearly everywhere, the predictions of the textbook model simply cannot be relied on. Second, because costs are higher with this new input mix, product prices rise, which further reduces labor demand. As trade unions were decriminalized during the century, attempts to control wages through collective agreement were made. At a minimum, even if one has somewhat different views about these alternative studies, blanket statements claiming that there is no evidence that raising the minimum wage costs jobs are simply untrue. In addition, elasticities estimated from most existing minimum wage studies overstate the wage gain, because they are computed in terms of the legislated increase in the minimum wage;however, typically, some affected workers are already earning more than the old minimum wage but less than the new minimum wage , so the size of the average wage increase for them will be smaller than the minimum wage increase itself. Discussion of pros and cons Theory Textbook analyses of minimum wages portray a competitive labor market for a single type of labor, with an upward-sloping labor supply curve and a downward-sloping labor demand curve. India was one of the first developing countries to introduce minimum wage policy in its law in
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