The effect of minimum wage on unemployment in the UK
Extract
1 : History
of the National Minimum Wage
Extract 2 : Labour
Market Impact
Extract 3 : Literature
Survey
Extract 4 : Survey
Extract 5 : Results
and Analysis
Literature Review
Kaushik Basu et al :Cornell University - Department of
Economics; Massachusetts Institute of Technology (MIT) -
Department of Economics
National Bureau of Economic Research (NBER) Research Paper
1997
Unemployment and Wage Rigidity when Labour Supply is
a Household Decision
If people's labour-supply decisions are taken at the level
of the household, it is natural to expect aggregate demand
and unemployment to influence the supply curve of labour.
An increase in unemployment could prompt households to send
more workers out in search of work to insure against the
risk of the primary worker getting unemployed (the "added
worker effect"). But it could also discourage people
from wasting energy searching for work (the "discouragement
effect"). While these effects have been studied empirically,
their theoretical bases remain largely unexplored. The present
paper formally models household labour supply decisions
and establishes sufficient conditions for the domination
of one effect over the other. A number of surprising results
are established, such as the possibility of multiple equilibrium
in the labour Market and how the announcement of a minimum
wage policy can result in an overall lowering of wages and
also give rise to an equilibrium which displays, simultaneously,
excess demand and excess supply of labour. The model shows
how the empirical literature may have a bias in overestimating
the strength of the discouragement effect. It also provides
a framework for analyzing the effects of minimum wage policy
and the provision of unemployment benefits. It is argued
that certain kinds of unemployment benefits can be justified
on grounds of efficiency
Grossman et al:Brown University - Department of Economics;
National Bureau of Economic Research (NBER)
1981-04-01 :
NBER Working Paper No. W0653
This paper considers the possible employment effects of
reforming minimum-wage policy to incorporate indexation
of the nominal minimum wage. The analysis assumes that both
the demand for the labour services of minimum-wage workers
and the setting of the nominal minimum wage rate under existing
policy depend in part on rational expectations of future
average wage rates. The analysis implies that, if the indexation
ratio of the nominal minimum wage to the recent-past average
wage rate were large relative both to the level and trend
of the expected rate of average wage inflation and to the
existing relative minimum-wage target, indexation would
decrease the average level over time of minimum-wage employment.
The analysis also implies that, if the year-to-year variation
in expected wage inflation were large relative to the year-to-year
variation in unexpected wage inflation, indexation would
increase the year-to-year variation in minimum-wage employment.
R.Sobel:West Virginia University - Department of Economics
Journal of Political Economy, Vol. 107, Issue 4, August 1999
Theory and Evidence on the Political Economy of the Minimum Wage
Abstract:
This paper examines how closely the minimum wage has been
set to the most popularly stated goals of minimum-wage policy.
I first estimate these goals: the minimum-wage rate at which
the relevant labour demand is unitary elastic--maximizing
the total earnings of minimum-wage workers (about $5.35)--and
the level that would lift a typical minimum-wage worker's
family out of poverty about $5.17). I can reject that actual
minimum-wage policy has been driven by a desire to achieve
these goals and find that a simple interest group model
best explains the historical path of the minimum-wage rate.
OLM Waldman
Bard College - General
July 1997 :Levy Economics Institute WP #197
Minimum Wage and Justice?
Abstract:
Much of the debate over the minimum wage in recent years
has essentially involved one between those arguing the adverse
effect of raising the minimum wage--particularly among teenagers--and
those who maintain that increases in the minimum wage would
not only alleviate the poverty of some, but offer an attractive
alternative to welfare. Often absent from the discussions
have been grounded considerations of equity and justice.
On the contrary, substantive questions of justice are at
the root of the debate. And were the minimum wage to be
approached from a more philosophical framework--as opposed
to the impartiality of a cost-benefit analysis--a stronger
case could be made for the minimum wage. This paper ultimately
argues that a strong moral case for the minimum wage requires
strong philosophical arguments.
Grossman et al :Brown University - Department of Economics;
National Bureau of Economic Research (NBER)
1982-01-01
NBER Working Paper No. W0652
Abstract:
This study investigates the effects of Federal minimum wage
policy on minimum wage employment, aggregate employment,
and average wage rates. The theoretical analysis focuses
on the possible effect of the Federal minimum wage in constraining
wages and employment in a subset of labour markets, on the
possible responses of labour suppliers to these constraints,
and on the possible role of the policy of presetting the
nominal minimum wage in making monetary policy no neutral.
Among the elements of the theoretical framework that are
both distinctive and important are the assumptions that
both the demands and supplies of labour services in the
subset of constrained markets depend on the expected relative
minimum wage in the near and distant future, as well as
on the current relative minimum wage and on past levels
of employment, and that the relevant expectations of both
workers and employers about relative minimum wages are "rational."
Minimum Wages and Employment in France and the United
States
John Abowd et al
Cornell University - School of Industrial and Labour Relations;
National Bureau of Economic Research (NBER)
March 1999
NBER Working Paper No. W6996
Abstract:
We use longitudinal individual wage and employment data
in France and the United States to investigate the effect
of changes in the real minimum wage on an individual's employment
status. We find that movements in both French and American
real minimum wages are associated with mild employment effects
in general and very strong effects on workers employed at
the minimum wage. In the French case, a 1% increase in the
real minimum wage decreases the future employment probability
of a man (respectively, a woman) currently employed at the
minimum wage by 1.3% (1.0%). In the United States, a decrease
in the real minimum wage of 1% increases the probability
that a man (woman) employed at the minimum wage came from
unemployment in the previous year by 0.4% (1.6%).
David Weil :Harvard University - John F. Kennedy School
of Government; Boston University - School of Management
Social Science Research Network 2003
Compliance with the Minimum Wage: Can Government Make a Difference?
Abstract:
This paper examines patterns of compliance and non-compliance
with federal minimum wage laws in the U.S. apparel industry
and analyzes the impact of new methods of intervention designed
to improve regulatory performance. Drawing on contractor-level
data from a randomized survey of apparel contractors, the
paper assesses the major correlates of compliance with minimum
wage provisions of the Fair Labour Standards Act. It then
evaluates the impact of agreements between manufacturers
and the government used to monitor contractor behaviour
as a means of improving compliance outcomes. Non-compliance
is significantly correlated with characteristics predicted
by theory including employer size, skill content, and the
elasticity of labour and product demand. Nonetheless, stringent
forms of contractor monitoring are associated with significant
reductions in the presence, incidence, and severity of violations
of minimum wage standards.
David Neumark et al
Public Policy Institute of California; Michigan State University;
National Bureau of Economic Research (NBER)
NBER Working Paper No. W7519
Abstract:
This paper provides evidence on a wide set of margins along
which labour markets can adjust in response to increases
in the minimum wage, including wages, hours, employment,
and ultimately labour income, representing the central margins
of adjustment that impact the economic well-being of workers
potentially affected by minimum wage increases. The evidence
indicates that workers initially earning near the minimum
wage are adversely affected by minimum wage increases, while,
not surprisingly, higher-wage workers are little affected.
Although wages of low-wage workers increase, their hours
and employment decline, and the combined effect of these
changes is a decline in earned income.
Bibliography
International Labour Organization Survey Reports 1987:2002
The Report from the Inland Revenues 1999:2002
The National Commission for the Minimum Wage Reports 1999:2002.
Research Methodology: Greene & Taal
OCED Reports on United Kingdom: 1990:2002
Extract
1 : History
of the National Minimum Wage
Extract 2 : Labour
Market Impact
Extract 3 : Literature
Survey
Extract 4 : Survey
Extract 5 : Results
and Analysis
Legal Notice - None of our work is to be passed off as your own or as anyone else's, nor is it to be reproduced either in whole or in part. This a breach of copyright. It also constitutes plagiarism and will breach University Regulations, consult your guidelines if you are unsure. If we suspect that any law essays or materials are being used for such purposes then we will refuse to carry out that work and all future essay work for the person involved.
Refund Policy : Law Essays UK has a strict no refund policy due to the highly specialised and individual nature of the services we provide. Our services are provided as is, and accordingly the customer orders on their own initiative. However, for your peace of mind, we guarantee that if you are not satisfied with an essay, for whatever reason, then we can amend it accordingly to your specifications. In addition, under our crystal clear guarantee, we will clarify anything contained within an essay or study material free of charge
Note: We offer a wholly independent law and legal research service. We are not affiliated with the Bar Council or any other organisation in any other way. Nor are they affiliated with us. We regret that we are unable to take on work from members of the public and businesses outside of doing model answers as law essays, legal essays, research and tutoring as to do so would contravene Bar Council regulations. All research services and materials offered are subject to availability. 5 day completion for law essays of 5,000 words or less only. All services are subject to availability. All trademarks and copyrights of other bodies and organisations are recognised and respected.
Visitors have also looked at...
1Law Essay Scams
Essay writing scams can be hard to spot.
Click here to find out how to avoid the essay scams2Essay writing in the press
Find out what the press say about essay writing in the 21st century.
3 Meet the Law Essays UK Team
Find out more about the individuals that provide this first class essay writing service.
Law Essays UK - world's only dedicated personalised law model answers service.
