The impact of minimum wage policy in New Zealand Introduction Ever since the introduction of the minimum wage policy by New Zealand, there has been a vivid debate about its economic consequences. The policy aims to protect employees at the bottom end of the labour market from wage exploitation, yet it is simultaneously linked to increased unemployment. The Dutch minimum wage policy provides a very interesting setting since the gap between the youth rates and the adult rates is among the largest of all countries.
The Effects of Minimum Wages on Employment David Neumark The minimum wage has gained momentum among policymakers as a way to alleviate rising wage and income inequality.
Much of the debate over this policy centers on whether raising the minimum wage causes job loss, as well as the potential magnitude of those losses.
Recent research shows conflicting evidence on both sides of the issue. In general, the evidence suggests that it is appropriate to weigh the cost of potential job losses from a higher minimum wage against the benefits of wage increases for other workers. It is easy to be confused about what effects minimum wages have on jobs for low-skilled workers.
Researchers offer conflicting evidence on whether or not raising the minimum wage means fewer jobs for these workers. Some recent studies even suggest overall employment could be harmed.
This Letter sheds light on the range of estimates and the different approaches in the research that might explain some of the conflicting results. It also presents some midrange estimates of the aggregate employment effects from recent minimum wage increases based on the research literature.
The controversy begins with the theory The standard model of competitive labor markets predicts that a higher minimum wage will lead to job loss among low-skilled workers. The simplest scenario considers a competitive labor market for a single type of labor. First, employers will substitute away from the low-skilled labor that is now more expensive towards other inputs, such as equipment or other capital.
Second, the higher wage and new input mix implies higher prices, in turn reducing product and labor demand. Of course, the labor market is more complicated. Most important, workers have varying skill levels, and a higher minimum wage will lead employers to hire fewer low-skilled workers and more high-skilled workers.
Moreover, fewer jobs for the least-skilled are most important from a policy perspective, since they are the ones the minimum wage is intended to help.
In some alternative labor market models, worker mobility is limited and individual employers therefore have some discretion in setting wages. However, such models may be less applicable to labor markets for unskilled workers most affected by the minimum wage; these markets typically have many similar employers in close proximity to each other think of a shopping mall and high worker turnover.
Nonetheless, the ultimate test is not theoretical conjecture, but evidence. Recent research on employment effects of minimum wages The earliest studies of the employment effects of minimum wages used only national variation in the U.
Newer research used data from an increasing number of states raising their minimum wages above the federal minimum.
The across-state variation allowed comparisons of changes in youth employment between states that did and did not raise their minimum wage.
This made it easier to distinguish the effects of minimum wages from those of business cycle and other influences on aggregate low-skill employment. Research sincehowever, has reported conflicting findings. However, without strong assumptions it is impossible to rule out an alternative interpretation—that peer review and publication lead to more evidence of negative estimates because the true effect is negative.
In addition, meta-analyses do not assign more weight to the most compelling evidence. Indeed, they often downweight less precise estimates, even though the lower precision may be attributable to more compelling research strategies that ask more of the data.
In short, meta-analysis is no substitute for critical evaluation of alternative studies. A second strand of recent research that conflicts with earlier conclusions argues that geography matters. In other words, the only valid conclusions come from studies that compare changes among close or contiguous states or subareas of states for example, Dube, Lester, and Reich A number of studies using narrow geographic comparisons find employment effects that are closer to zero and not statistically significant for both teenagers and restaurant workers.
The studies argue that their results differ because comparisons between distant states confound actual minimum wage effects with other associated negative shocks to low-skill labor markets. Some follow-up studies, however, suggest that limiting comparisons to geographically proximate areas generates misleading evidence of no job loss effects from minimum wages.
Pointing to evidence that minimum wages tend to be raised when labor markets are tight, this research suggests that, among nearby states that are similar in other respects, minimum wage increases are more likely to be associated with positive shocks, obscuring the actual negative effects of minimum wages.
Some new strategies in recent studies have also found generally stronger evidence of job loss for low-skilled workers. For example, Clemens and Wither compare job changes within states between workers who received federal minimum wage increases because of lower state minimums and others whose wages were low but not low enough to be directly affected.Minimum wage has been altered many times since it was put into place in the United States in , while also leading to arguments of increasing minimum wage and decreasing minimum wage and the effects this would have on the economy.
2 Does the UK Minimum Wage Reduce Employment? A Meta-Regression Analysis 1. Introduction There is a long and rich tradition of investigating the employment consequences of a.
minimum wage, as noted by Partridge and Partridge (), is that the minimum wage can in wage to an average wage. Because of this, we have chosen to include gross national income per the result of a change in minimum wage.
After running the regression, this paper finds a similar. Minimum Wage Essay Examples. 29 total results. Increasing the Minimum Wage Makes People Lose Jobs. words. 1 page. An Analysis of the Webonomics and the Minimum Wage Regression. words.
1 page. Dealing with the Problem of Minimum Wage in . Minimum Wage and Poverty in the United States According to Gindling and Terrell (), using the study that was conducted by Blackburn and Addison in , an increase in the minimum wage had a positive effect on the level of junior high school dropouts from to The Fair Minimum Wage Act of is legislation to amend the FLSA of and it serves to raise the federal minimunl wage from $ to $ in three increments.