<Criminal Law Essays and Dissertations

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

The results and the analysis:

  • We try to figure out the indications made by the figures we got through our analysis.
  • We find out that there is a significant decline in the overall aggregate level of unemployment during the period of 1987-2002 .The result is indicating a better macro-economic condition that has helped the reduction in the figures in the unemployment's. There are variations within the period but overall we can conclude that the macro economic factors have done quite well to reduce the aggregate level of unemployment. The trend of the past years also continued during the period of the 1999-2002 indicating strong presence of the macroeconomic factors is the declining unemployment levels.
  • We see the standard deviations during the period in the aggregate level of unemployment. We see that the dispersion exist is acceptable given the economic shock during the early 1990s because of the global unrest.
  • We see the general trend in the unemployment and could see that the trend is following the initial trend set between 1987 to 2002 .So there is not direct effect of the National Minimum Wage on the unemployment.
    " We see the standard deviation in the aggregate level of unemployment during the periods 1999-2002. This figure has gone down around 50% compared to the dispersion shown in the dispersion level of unemployment for the period 1987-2002 .The results indicated that after the introduction of the National Minimum wage, there is a more stable decline in the level of unemployment compared to the bigger horizon of 1987-2002.
  • We see the trend in the National Minimum Wage during the period of 1999-2002 .we see that there is a significant increase in the National Minimum Wage hourly rates and the upward trend is likely to continue. This has given a strong statement in favour of the National Minimum Wage, by the policy makers .We try to see the further how the continuous upward revisions of the National Minimum Wage has affected the unemployment in the UK and what are the correlation factor between the National Minimum Wage and the Unemployment numbers
  • We look at the correlation between the unemployment and the National Minimum Wage during the period of 1999-2002 .We find out that there is a negative correlation existing between the two factors .We further see the magnitude of the negative correlation. The figure indicated that there is no negative effect of the National Minimum Wage on the unemployment. Infect the magnitude of the negative correlation is suggesting that the unemployment level, has significantly gone down even with the significant increase in the National Minimum Wage. This alone could put further light of the debate that the introduction of National Minimum Wage may have a detrimental effect on the level of employment. Rather the figures are suggesting that the setting of the National Minimum Wage has not changed the declining trend in the unemployment. And with the increase in the National Minimum Wage the trend of decline in the level of unemployment continued. This provides a strong case for the National Minimum Wage.
  • We look at the covariance's of the two factors to se the way the dispersions in them are connected .By this we try to figure out any trend that may have existed between the changes in the National Minimum Wage and the unemployment on a yearly basis. The figure is quite indicative of no such strong relationships between the levels of dispersions of the two factors .By this we mean that the proportionate changes in the National Minimum Wage does not have any strong relationship with the changing numbers in the unemployment.

Conclusion:

The research has discussed the effect of the National Minimum Wage rate on the unemployment over the period of 1999-2002 .It also tried to include the prevalent trend in the unemployment from the period 1987-2002 to locate the precise effect of the National Minimum Wage on the unemployment by trying to locate any changes in the trend in the unemployment.
The results have shown that there is no negative effect of the National Minimum Wage on the unemployment and it also has shown that the trend of declining unemployment numbers from the previous years has not been changed by the introduction of the National Minimu8m Wage as ell as the continuous strong increase in the figures of the National Minimum Wage did not have any negative effect. This disproves the perceptions of any negative effect that National Minimum wage may have on the unemployment in the UK .The Study has been done with the aggregate numbers to have a broader picture on the issue .we did not try to see the effects of the National Minimum Wage on individual sectors or on the age group. Studying into these issues may lead to more revelations about the effect of the National Minimum Wage on the unemployment. But because of the brooder nature of this issue we have looked on the aggregate figures to come to a conclusion about the effect of National Minimum Wage on the Unemployment in the UK.

Appendix

The Data set used in the Research :

Year
Total Unemployment in millions
1987
3012.4
1988
2484.1
1989
2074.9
1990
1973.8
1991
2413.6
1992
2769.2
1993
2935.5
1994
2737.6
1995
2460.4
1996
2340.1
1997
2037.3
1998
1776.4
1999
1386.4
2000
1619.1
2001
1412.9


Year
Total
Men
Women
Rates, total
Rates, men
Rates, women
1987
3012.4
1807.9
1204.6
10.8
11.2
10.2
1988
2484.1
1474.8
1010.2
8.8
9.0
8.4
1989
2074.9
1215.1
859.9
7.2
7.4
7.0
1990
1973.8
1164.6
809.1
6.8
7.1
6.5
1991
2413.6
1513.9
899.7
8.4
9.2
7.2
1992
2769.2
1865.2
903.9
9.7
11.5
7.3
1993
2935.5
1986.4
949.2
10.3
12.4
7.6
1994
2737.6
1826.1
911.6
9.6
11.4
7.3
1995
2460.4
1611.8
848.6
8.6
10.1
6.8
1996
2340.1
1549.0
791.0
8.2
9.6
6.3
1997
2037.3
1305.8
731.5
7.1
8.1
5.7
1998
1776.4
1097.8
678.6
6.1
6.8
5.3
2000
1619.1
991.5
627.6
5.5
6.1
4.8
2001
1412.9
864.1
548.8
4.8
5.3
4.2
Source :International Labour Organization 2003

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

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