...Introduction: The minimum wage is an important example of price floor. Nowadays, in order to stick up for the labors’ rights, minimum wage is necessary. But, when relate to the whole market, minimum wage also cause so many problems. Generally speaking, I against it. Body: Many economists have different ideas of the minimum wage. Advocates consider that a higher minimum wage makes the poor better of. At the time, they also think that it is a necessary way to stick up for the labors’ rights. On the contrary, opponents note that a higher minimum wage causes unemployment and encourage teenagers to drop out of school. Moreover, the higher minimum wage makes skilled people useless. In my view, although minimum wage laws can set wages, they cannot guarantee jobs. If the government doesn’t intervene, the higher minimum wage may cause unemployment. The higher minimum wage means the wage above the equilibrium wage. From Panel(b) of figure4 in page 95, if the minimum wage above the equilibrium level. The quantity of labor supplied more than the demand. So it causes unemployment. What is more, more and more teenagers drop out of school because of the higher minimum wage. Pursuing a higher minimum wage becomes teenagers’ strong desire. Higher minimum wage also has some adverse effects. As I wrote before, higher minimum wage makes experienced people useless. Because of minimum wage, the labors’ marginal revenue product is higher than marginal cost. In other words, they make contribute...
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...Julie Moua Minium Wage Should Remain The Same. Do you think increasing or decreasing the minium wage will solve any problem or make more problems. I believe that it does not give a remedy of solving any problems such as in these areas. Unemployment, Proverty, and Lower chance of getting a job.The minimum wage should remain the same not decreased or increased. Consequently, people tend to believe that if you increased the wage it'll cause unemployment but the center of Policy Research concluded that "the minimum wage has little or no discrenible effect on the employment prospects of low wage workers. Therefore, there is proof of increasing minimum wage will result in unemployment. Futhermore, supporters argue that is an effective way of anti-poverty tool. Business pay their low wage workers more and fewer of them should live in proverty.Higher wage should fight proverty. However, labor economists have repeatedly studied the effects of wage increase.They find no correlation between higher wage and lower poverty. Raising the wage to $9 an hour would not reduce poverty. According to the saying of labor economist I also believe it because there is no evidence of lower wage cause poverty I would believe it has to do more with how people deals with their savings. Moreover, several academics studies have found that increasing minimum wage had no significant effect on employment levels in this country. Since, it is to be said that increasing wage will not cause the possibilty of getting...
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...A bid to raise the country's minimum wage has failed. A Private Member's Bill from Labour MP David Clark was defeated 61 votes to 59 at its first reading in Parliament last night. This decision has some reasonable arguments. As we know sharp increase in minimum wage can be effect of increase unemployment in the country,cause an inflation and black market, though increase in minimum wage means increase level of economy in country. Obviously, the main reason that government did not increase minimum wage is a fear of increasing unemployment. It is an reasonable argument, because the demand of work places will increase Q3 (if the minimum wage rate will increase), but not all employers can pay more then equilibrium wage rate(Q2- the amount of employers which would pay new wage rate)and they will reduce the amount of employees, that will be the reason of unemployment. We can see this situation on the graph below. min wage W1 is the equilibrium wage rate in New Zealand, which is now less 13.75, because it is still unemployment, which is 6.9 %. Q3-Q2 - people who lost their jobs. Also sharp increase in minimum wage can cause inflation, because firm's revenue will be less if they will pay more to workers and they will increase their prices to stabilize their revenue. Another disadvantage is that increase in minimum wage can be reason of increasing black market labor, more people work in black market and firms can avoid to pay legal minimum. This will effect New Zealand economy badly...
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...Explaining Unemployment: An Analysis on State Unemployment Rates Rachel Schlesselman Creighton University Introduction and Research Question Mississippi has 48,434 square miles of land. The state flower is the magnolia. Hawaii has only 6, 423 square miles of land and the yellow hibiscus as the state flower. These states are very different in many aspects; their populations, products, and geography are all very different. States are very unique and while national averages can give a general understanding of these separate entities, how are we to be sure it is an accurate account. The national average for unemployment in August of 2006 was at 4.7 percent. This does not adequately represent the unemployment rates for Mississippi or Hawaii. Mississippi had the highest unemployment rate of all states at 7.1 percent. Hawaii on the other hand, had the lowest at 2.8 percent. If the national average does not accurately represent the unemployment rates of these states, is it not then important for us to look at those state rates and determine our own cause for the differences? It is because of this I ask the question, how do we explain the variation of unemployment rates among the individual states? It is important to clarify exactly what the question is asking and the unit of analysis that is going to be tested. According to the Bureau of Labor, unemployment is defined as “persons who did not work or have a job during the reference period, were actively looking for work during the...
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...sources to analyse the main causes of unemployment. Identify strategies that governments can use to reduce each of these causes. Assess which of these strategies might be most useful in reducing unemployment. Governments often regard reducing unemployment as one of the main economic objectives. Unemployment is the existence that there is labour force able and willing to work but is unable to be employed (Bannock, Baxter, 2011). It tends to follow a cyclical pattern. In the early 1990s, the unemployment began to rise as economies around the world went into recession. On the other hand, in the mid-1990s, unemployment fell as the world was in the period of expansion. The UK is now in a very low level of unemployment. The causes of unemployment can be categorized into equilibrium unemployment and disequilibrium unemployment. It can be classical, cyclical, frictional and structural. This essay will first describe the main causes of unemployment. Then, it will survey the possible policies that can be adopted by the government to reduce these causes. Finally, it will evaluate the most useful policy. Disequilibrium unemployment is the condition that the supply of labour exceeds the demand of labour and the wages remain relatively unchanged (Gillespie, 2011). Classical (real wage) unemployment and cyclical (demand-deficient) unemployment are two possible causes of disequilibrium unemployment. Classical or real wage unemployment will happen when the real wage is high above the equilibrium...
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...Minimum wage in California is predicted to increase up to $15.00 an hour by the year 2023. Most people fighting for an increase in minimum wage are restaurant workers, especially in the fast food industry, dissatisfied with the current minimum wage of about $10.00. Economists, on the other hand, oppose raising the minimum wage for numerous reasons, such as an increase in unemployment, the effects it has on minors, the effects of the free market, and the “-ism”’s that increase. The largest and most often point argued by economists that oppose raising minimum wage is that it increases unemployment. Statistics show that “...in 2013, a $1 increase in the minimum wage was associated with a 1.48 percentage point increase in the unemployment rate…”...
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...achieved is specialisation. Domestic industries now compete against foreign firms at home and abroad. Uncompetitive firms will be eliminated by more efficient rivals, which mean higher unemployment in uncompetitive countries. For a small, open economy like Ireland, the solution to unemployment caused by competition from abroad is to capture large economies of scale. This can be achieved by focusing on becoming the world leader and largest producer in a small, specialized segment of an established industry. For instance, supplying specialized inputs for the car manufacturing industry or parts of a computer processor. Another cause of unemployment is immigration. The impact of immigration on the labour market critically depends on the skills of migrants, the skills of existing workers and on the extent to which migrants have skills that are substitutes or complements to those of existing workers. Generally migrants whose skills are substitutes will cause higher unemployment through lower wages while complementary skills have no adverse impact on employment. However, while immigration can result in increased unemployment in the short run, immigrants expand consumer demand for goods and services. In the medium to long run this results in greater demand for labour and thus increased wages and employment in the economy. This alleviates the initial increase in...
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...14 MODELS OF UNEMPLOYMENT Chapter 14 Contents A. Topics and Tools ............................................................................ 2 B. Defining Unemployment .................................................................. 3 The statistical definition ................................................................................................3 Problems with the statistical measures ............................................................................4 Natural and cyclical unemployment ...............................................................................6 C. Introduction to Theories of Unemployment........................................... 7 D. Minimum Wages and Unemployment ................................................. 10 A simple minimum-wage model .................................................................................. 10 Minimum-wage effects on skilled and unskilled labor ..................................................... 11 E. Unemployment Insurance and the Length of Job Search .......................... 13 A simple model of job search ........................................................................................ 13 Unemployment benefits and search duration ................................................................. 15 Optimal search duration ............................................................................................. 17 F. Unions and Unemployment ..................
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...expensive, especially for those who are minimum wage workers. The $7.25 per hour can barely help workers afford their basic needs. Minimum wage has a huge domino effect, when people who make minimum wage get done paying their bills they are left with little to no money to spend, which means businesses lose customers, and when businesses lose customers this weakens our economy causing people to go into debt, and turn to the government for assistance. President Obama said “Raising the minimum wage will benefit about 28 million workers across the country, and it will help businesses too (Lee).” Minimum wage should be increased to provide families with living wages, increase the employment rates, and increase...
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...the minimum wage, the time is now,” said Delegate Derek E. Davis, of Price George’s County. The increase in minimum wages has been a topic that has been on the rise with much controversy involved. President Obama wants state and lawmakers to increase the minimum wage from $7.25 to $10.10 per hour by 2018. Connecticut was the first state to pass the law, which will increase their minimum wage to $10.10 by January 1, 2017. Maryland is a year and half behind them, making the minimum wage $10.10 by July 1, 2018. The reason for Maryland’s delay is because they want to give businesses more time to adjust to the new and increasing price. The increases will be in steps. The first increase will be from now until July 2018, and will increase to $8 per hour on January 1, 2015. The second increase will be to $8.75 per hour in July 2016. The third increase will be to $9.25 in July 2017, and then the final increase to $10.10 in 2018. The graph below, from the congressional budget office website, shows the increases of wages over the time period. President Obama commended Martin O’Malley and other lawmakers for “leading by example” in hopes that congress will follow. However, some counties have been setting their minimum wages even higher than $10.10. Montgomery and Prince George’s counties have approved their minimum wage increase to $11.50 by 2017. However, businesses are going to be allowed to pay a lower training wage to workers under 20 years old. However, this increase in wages has...
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...When examining the topic of minimum wage, it is imperative that one has a basic understanding of the United States economy, as well as an understanding of basic monetary principles. The United States has a Capitalist economy, which means that the economy is owned by private investors rather than the government, and prices and production are determined by supply and demand. Inflation, another key term when discussing money, is, principally, the devaluing of currency. This inflation can happen several ways: first, the currency becomes less rare, making it worth less and less; second, an increase in the price of goods or services without an increase in the value. One example of the latter process would be increasing the cost of labor without increasing...
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...and Brue, authors of Microeconomics the 14th edition, income inequality is "the unequal distribution of an economy's total income among persons or families.” Recently, studies have shown that income inequality has many connections that have caused the gap in the United States. According to the research I found, income inequality is connected to corruption, trade, wages of workers, and education. The world income inequality had declined since the twentieth century according to the studies found (Clark). Corruption falls increasing on low income individuals more than higher income individuals. Additionally, the trade theory suggests that the free trade might have level up the income inequality higher within countries by the different patterns of wages and demand for workers who are skilled and unskilled (Silva and Leichenko). Moreover, the education of wealthier people has it easier because the learning efforts of education are unbalanced. Besides, income inequality in the United States is hurting our economy due to the all the issues of corruption, trade, wages, and education. They also point out that some of the causes of income inequality are "differences in ability, education and training, discrimination, tastes, and risks.” As a whole we saw these factors very useful in explaining why it exists, but the problem with these is that they are mostly abstract. It is almost impossible to measure someone's tastes and preferences, but it is easy to measure the level of education and...
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...Jack Maher Raising the Minimum Wage: a Conversation with Economist On November 4th 2014, La Crosse ballots will include a non-binding referendum on raising the minimum wage to $10.10. The University of Wisconsin-La Crosse was fortunate enough to gather members from the Economics department and discuss this present issue at hand. The Economists were able to present arguments in a non-biased form to us, the students. The argument to raise the minimum wage had both positive and negative points. Raising the minimum wage has positive points. The main goal of raising minimum wage to $10.10 is to raise income for the working poor. Annual earnings for an employee that works 2000 hours a year at the current minimum wage accrues an annual salary of $14,500. By raising the minimum wage to $10.10, the annual salary would rise to $20,200. It can also be noted that when an employee earns more, they tend to work harder. This would push two percent of the population who live in poverty above the poverty line. This can cause an increase in production. Overall, a raise in minimum wage to employ’s would generate improvements to the working poor. Raising the minimum wage; however, brings up economical issues. The first issue being that raising the minimum wage would cause an increase in unemployment. Economic logic supports the idea that elasticities of labor demand would be large for unskilled workers. Also, unemployment will increase due to the fact that companies can outsource...
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...federal and state laws setting minimum wages for workers. There are also city laws setting price ceilings for housing rents. Why are there laws setting minimum wages for workers and maximum rents for housing? The U.S congress first instituted a minimum wage with the Fair Labor Standard Act of 1938 to ensure worker’s can afford minimally adequate standard of living.(Mankiw,2008). However, minimum wage laws may raise the income of some workers, but they also cause other workers to be unemployed. The wage levels are fundamentally determined by the productivity of its labor force. The impact of the minimum wage depends on the skills and experience of the workers. The rent control policy such as maximum rents for housing was created to set a legal maximum on the amount landlords can charge for their properties. it is also known as Emergency Tenant Protection Act. The policy helps the poor by making housing more affordable. according to Mankiw, (2008) rent controls are beneficial but can also be disadvantaging because rent control may keep rents low, but it also discourage landlords from maintaining their buildings and housing hard to find. Why are there no laws setting maximum wages for workers or minimum rents for housing? There are no laws for setting maximum wages for workers or minimum rents for housing because it regulates itself overtime. For example when the economy is doing well, the wages and rents are favorable to the people. Setting minimum rent setting would affect...
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...The effects of introducing a living wage of £7.20 per hour on the labour market can be examined using the data known about the introduction of the minimum wage in April 1999. The living wage behaves like as a price floor as the government intervenes to maintain wages above the equilibrium wage, which is represented as the current minimum wage of £6.70. The diagram represents the theoretical effects of the policy: We can infer that due to the new policy, there are fewer workers demanded than there are supplied leading to a worker surplus. Hence the living wage is binding on the labour market as wages can’t drop below £7.20. Businesses are generating the same profit, while providing higher wages, so demand for workers shrinks. Employees work effectively and efficiently due to the...
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