Essays on impact of minimum wage on uk employment

University of California, Santa Barbara Type of paper: Essay This essay has been submitted by a student.

Essays on impact of minimum wage on uk employment

Blair was responding to popular demand, since the Conservative government in had ended the old system of minimum wages. Michael Forsyth, the Employment Minister at the time said: Wages councils destroy employment.

Certainly, the minimum wage is a popular policy, and the coalition government has not moved close to changing it. The national minimum wage NMW system has some interesting features.

Essays on impact of minimum wage on uk employment

Firstly, it is set in a technocratic way by experts who rely on research. As such, changes in the NMW have responded closely to changes in the health of the economy. The biggest exception to this was in when the thrusting Stephen Byers saw electoral advantage in pushing the youth rate up considerably prior to the May election.

The important point here is that the NMW is set explicitly to weigh as little on unemployment as possible. Hence, arguably, the level has always been too high for the north, and too low for the London area.

The NMW does, however, have several age categories, with a youth sub-minimum, and an even lower apprentice sub-minimum.

Thus, it has been sensibly conceded that young workers and apprentices are less productive. Again, we see an effort to mute the unemployment consequences. The unemployment rate for the group almost doubled from The working age population as a whole have not done nearly as badly as this.

In addition, unemployment duration for the young age group has worsened, to the point where UK evidence The minimum wage has been raised considerably over the period since The impact of the minimum wage can be seen in Figure 1, which compares the earnings distributions in both and The distribution has had its lower tail cut off compared with theand there is also a concentration of workers at the minimum.

What effect has this had on job opportunities for the unskilled? There are inherent statistical difficulties of identifying the impacts of a policy that covers the whole of the UK. The first person to conduct this type of study was Mark Stewartwho used data for changes in wages and employment in about UK regions for the first year of the NMW.

He found no adverse effect, but with only one data point per region he could not allow for region-specific trends or long-run effects. His work has recently been updated Dolton et al.

Again, while little effect on employment is found, there is a significant increase in claimant unemployment.

Essays on impact of minimum wage on uk employment

An alternative approach is to compare workers who have their wages raised by the NMW with workers paid just above that level say, up to 10 per cent above the minimum. These workers should have similar skills, and welfare benefit options. This method was also pioneered for the UK by Stewart He again found no adverse NMW employment effects.

However, in more recent work Stewart and Swaffield,he has found evidence that the NMW causes a cut in working hours of between 1 and 2 hours per week. The latest work using this approach is by Dickens, Riley and Wilkinsonusing data up to and encompasses recession years which hit unskilled workers harder.

This research finds that the probability of remaining in a job employment retention is reduced by about three percentage points by the NMW for part-time women, the group who are most affected by the NMW.Finally, new estimates of the employment effects of the Minimum Wage (MW) are produced focusing on a panel of 33 OECD and European countries for the period - Minimum Wage Companies and small business’s pay their employees hourly wages based on a minimum wage.

Today in America we have many hard workers who are working for minimum wage which consists of $ per hour. The Effects Of Minimum Wage On The Society Words | 5 Pages. Minimum wage is the topic I chose because there has been a controversy regarding raising minimum wage and the impact of minimum wage to the society.

To begin with Minimum wage is the lowest compensation paid to employees based on what is believed to be the basic living wages necessary for a person living in a particular place, region or doing a certain job. Estimates of the minimum wage elasticity for youth employment range between and At the same time the conclusion are in sharp contrast with findings of Portugal and Cardoso () who inferred a positive effect of minimum wage increases on youth .

Some economist defines the impact of minimum wages by means of the employment elasticity: that is, the ratio of percentage change in employment to the percentage change in the legislated minimum wage.

Unemployment and the minimum wage - Institute of Economic Affairs