Economists sometimes argue about the effects of the minimum wage: 1. Advocates o

Question

Economists sometimes argue about the effects of the minimum wage: 1. Advocates of a higher minimum wage point to evidence that in big cities changes in the minimum wage do not reduce the number of workers in each restaurant. 2. Those who oppose a higher minimum wage point out that those groups most affected by the minimum wage (unskilled workers, teenagers) have higher rates of unemployment than other groups Evaluate the strength of each of these bits of evidence, and briefly explain which you find most convincing

Explanation / Answer

1) the first one conveys the idea of providing higher minimum wage. This would ensure skilled labours, and would also prevent the movement of labour for small variations in wages. This would ensure long run labour and also the feasibility to the employer to choose the best as he is providing high minimum wage.

2) the higher minimum wage idea is opposed because, this is uneconomical. The higher wage rate applies to all worker irrespective of there capabilities, and also discourages them to work hard in order to get higher wages.

I find the second more convincing. Labours must get wages according to their capabilities and productivity, this would also encourage them to improvise themselves in order to earn more.

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