Answer to Question #244874 in Microeconomics for Biba

Question

5. Consider a proposal to raise thevminimum wage by 10 percent. After reviewing the arguments in the chapter, estimate the impact upon employment and upon the incomes of affected workers. Using the numbers you have derived, write a short essay explaining how you would decide if you had to make a recommendation on the minimum wage.

Answer 1

Minimum wages refers to the least amount of wages to be paid to the workers so that they can sustain the livelihood of their families. This is the wage paid for by the welfare of the workers. The increase in the minimum wages helps workers to improve their living standards, fight poverty and boost morale. The minimum wages are fixed by the government. Minimum wages can increase the efficiency of the labour market in monopoly scenario. The main purpose of minimum wages is to protect workers against excessively low wages.