3.5.3 Minimum wage legislation
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36 Terms
What is a minimum wage
a legally set minimum price for labour
Why must a minimum wage be above equilibrium
otherwise it is ineffective
What happens to employment with a high minimum wage
employment may fall
Why does elasticity of labour demand matter
inelastic demand means smaller job losses
Has the UK NMW increased unemployment
no clear evidence so far
Why might NMW not raise unemployment
wage still relatively low
What positive externalities can minimum wages create
higher living standards incentives to work
How might minimum wages affect young workers
harder to find jobs due to low experience
How can minimum wages affect tax revenue
higher wages increase tax receipts
Why might minimum wages reduce competitiveness
higher labour costs than other countries
What is international competitiveness
ability to compete abroad and raise living standards
Why are skills important for competitiveness
they increase productivity
What is human capital
skills education training of workers
How do skills shortages affect firms
limit expansion raise costs reduce innovation
How does human capital move production up supply chain
from primary to services
Why do skilled workers lower unit labour costs
higher productivity per worker
How does labour flexibility affect competitiveness
improves response to shocks
Why is skilled labour more flexible
easier occupational mobility
How does migration affect labour supply
increases supply at all wage levels
Why does migration affect low wages most
migrants accept lower wages
Does migration reduce domestic wages significantly
evidence shows small effect
How can migrants increase productivity
bring high-level skills
When does migration create welfare gains
when skills complement domestic labour
What is underemployment
working fewer hours than desired
Why did underemployment rise after recession
lack of full-time jobs
Why do graduates earn more on average
higher skills productivity
Why has wage inequality increased
technology and globalisation
Why do low-skilled service jobs pay less
low productivity skill levels
Why do women earn less on average
career breaks part-time work discrimination
Is the gender pay gap changing
narrowing but still exists
How can inequality act as an incentive
motivates skill acquisition
Why does capitalism generate wage inequality
wages reflect productivity
Why do benefits rise slower than wages
index-linked only to inflation
How do welfare cuts affect inequality
lower real incomes for poorest
What is a regressive tax
lower incomes pay higher proportion
Why do regressive taxes increase inequality
heavier burden on the poor