3.5 - Maximum Wage

Question 1

What are the advantages of a maximum wage?

Answer 1

Reduces excess pay
Improves equity
Reallocation of funds

Question 2

How can wage funds be reallocated?

Answer 2

Increase wages of others
Reinvest in business
Prices can be lowered

Question 3

What are the drawbacks of a maximum wage?

Answer 3

Brain drain potential
May create labour shortage
Complex administration
Information + govt failure

Question 4

What is a highly proposed alternative to maximum wage?

Answer 4

Adjust tax bands
Increase progressions

Question 5

What are the regional + industrial arguments against maximum wage?

Answer 5

Average wages vary regionally + between industries
If max is set relative to average wage, results will differ significantly