What Is Minimum Wage Simulation?
Statutory minimum wage regulation was first introduced in New Zealand in 1894. Some attempt to control wages had been present since policymakers started believe that the market wages of labour was unfair to the workers. Minimum wage laws dictate a lowest hourly or monthly wage rate that employers may legally pay to workers. For instance, the Minionion government had set a new minimum wages rate of MS900 which intend to ensure that the basic needs of the workers and their families are met. Since that the growing debates over the imposition of minimum wage policy have become a very popular topic with examiners in recent year, therefore we may examine the effects of the minimum wage by looking at the theory behind it.
Diagram1 shows a classical …show more content…
There is the Krueger and Card study that concluded that “We find no indication that the rise in the minimum wage reduced employment”.(Robert,2013) Most studies find that the minimum wage policy has only a slight effect on employment but not result in the mass unemployment predicted in the traditional view. One of the possible assumptions to explain this phenomenon is that the labour demanded by firms and the demand for the product that workers produce is both highly inelastic due to the rapid economic and population …show more content…
However, when we talk about efficiency, we may find that increase the equilibrium wage rate by raising the skill level of workers is actually challenging in practice. For instance, without intervention of government, we can’t guarantee that the firms will take the right steps to increase productivity, instead of relying on the low-cost workers. Besides, skill enhancement policy require government to spend more budget on investing education, and it also takes longer realisation period to see the results. Due to the greater opportunity costs and less efficiency, it could be evaluated that skill enhancement policy may not be the first choice to reduce poverty. As contrasted, setting a minimum wage rate is envisaged to have obvious effect in reducing poverty since it directly increases low-skilled workers wage rate. Firm may be encouraged to provide training to improve the productivity of workers since the relative cost between capital and labour narrows. These changes would facilitate the transformation of nations into high productivity and high income economy. We may conclude that set up a minimum wage will probably have slightly negative effect on unemployment. But with this small opportunity costs, it may boots our economy and improve the living standard of most workers. In other words, the benefits of minimum wage far outweigh the
Diagram1 shows a classical …show more content…
There is the Krueger and Card study that concluded that “We find no indication that the rise in the minimum wage reduced employment”.(Robert,2013) Most studies find that the minimum wage policy has only a slight effect on employment but not result in the mass unemployment predicted in the traditional view. One of the possible assumptions to explain this phenomenon is that the labour demanded by firms and the demand for the product that workers produce is both highly inelastic due to the rapid economic and population …show more content…
However, when we talk about efficiency, we may find that increase the equilibrium wage rate by raising the skill level of workers is actually challenging in practice. For instance, without intervention of government, we can’t guarantee that the firms will take the right steps to increase productivity, instead of relying on the low-cost workers. Besides, skill enhancement policy require government to spend more budget on investing education, and it also takes longer realisation period to see the results. Due to the greater opportunity costs and less efficiency, it could be evaluated that skill enhancement policy may not be the first choice to reduce poverty. As contrasted, setting a minimum wage rate is envisaged to have obvious effect in reducing poverty since it directly increases low-skilled workers wage rate. Firm may be encouraged to provide training to improve the productivity of workers since the relative cost between capital and labour narrows. These changes would facilitate the transformation of nations into high productivity and high income economy. We may conclude that set up a minimum wage will probably have slightly negative effect on unemployment. But with this small opportunity costs, it may boots our economy and improve the living standard of most workers. In other words, the benefits of minimum wage far outweigh the