3.5.3 minimum wage legislation Flashcards
Where does minimum wage have to be set?
Above the free market price, just like other minimum prices, otherwise it would be ineffective.
How does the NMW have positive externalities?
Increases standard of living for the poorest and provide an incentive for people to work.
Why could the NMW make it harder for young people to find a job?
Their lack of experience might not be valuable to firms who are paying more for their labour.
What does higher NMW do to competition?
Makes the country less competitive since they cannot compete with countries who have cheap labour.
What is international competitiveness?
The ability of a nation to compete successfully overseas and sustain improvements in real output and living standards.
How can human capital be developed?
By filling a skills shortage.
What does developing human capital allow for?
It improves the skills base in the economy, which improves productivity and allows more advanced technology to be used, since workers will have the necessary skills.
It can also help a market better respond to economic shocks, which can help improve competitiveness.
Why do those on benefits see a smaller real increase in income compared to those in jobs?
Since state pensions and welfare payments tend to increase less than wages, increasing inequality.
