The Effects Of Minimum Wage From A Microeconomic Perspective

The Effects of Minimum Wage from a Microeconomic Perspective Nathaniel Fishburne Embry-Riddle Aeronautical University Introduction The first minimum wage law was implemented in New Zealand and Australia in the late 1900s. In 1940s, George J. Stigler founded the first standard model of minimum wage. The model predicts that the if â€Å"minimum wage system is set above equilibrium wage level, it would create unemployment because some previously employed workers will lose their jobs while others find it is not worthwhile to work at the minimum wage that is above competitive wage† (Stigler, 1946, p. 361). Ehrenberg and Smith define the minimum wage as a policy that compels the employers to increase wages paid to all low-wage employees (2006). According to Lee, â€Å"minimum wage is the minimum level of payment recognized by law for work performed† (Lee, 2002, p.1). However, the fact remains that a minimum wage has social and economic effects, the dynamics that will be discussed in this paper. According to current statistics, 192 United Nations countries have adapted minimum wage as their primary wage policy. The objective of minimum wage is to allocate income without rescinding the jobs of low paid employees. Nevertheless, there is no agreement about the effect of minimum wage on employment. A large number of studies on the impact of minimum wage on unemployment suggest different findings and result on no minimum wage affect the level of employment in both developedShow MoreRelatedThe Effects Of Minimum Wage From A Microeconomic Perspective1670 Words   |  7 Pages The Effects Of Minimum Wage From A Microeconomic Perspective Nathaniel Fishburne Embry-Riddle Aeronautical University Introduction The first minimum wage law was implemented in New Zealand and Australia in the late 1900s. In 1940s, George J. Stigler founded the first standard model of minimum wage. The model predicts that the minimum wage system. It set above equilibrium wage level, would create unemployment because some previously employed labors lose their jobs while some find itRead MoreDifference Between Micro And Macro Economics895 Words   |  4 Pagesof a microeconomic phenomenon and an example of a macroeconomic one. If you look at the definition of the word micro, some words that come to mind are small and extremely tiny. Therefore, we can look at microeconomics as dealing with small quantities of the whole or specifics. At this end, microeconomics deals with things at an individual level and studies issues such as consumer behavior, individual labor market and supply and demand. According to Taylor et al. 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