The Impact of Minimum Wage Laws on Employment The Impact of Minimum Wage Laws on Employment ECO 359: Reading and Writing in Economics Professor Bora Yunn March 24th 2024 1 The Impact of Minimum Wage Laws on Employment The Impact of Minimum Wage Laws on Employment ABSTRACT This paper aims to review the existing literature on minimum wage laws, emphasizing the significant impacts on employment, poverty, and inequality. Along with concentrating on the existing literature works, theoretical framework and empirical research were also done to shed light on the complex consequences of minimum wage rules on employment. The primary focus of the study is based on the constraints of the labor market. It examines the intricacies of labor market dynamics by looking at various viewpoints and demographic effects. It also provides a deep knowledge of minimum wage laws and their impact on economic well-being by analyzing all the research findings and emphasizing policy implications. KEYWORDS 2 Minimum Wage Laws, Employment effect, labor productivity, poverty alleviation. INTRODUCTION The implications of the minimum wage laws and regulations can be dated back to the early 20th century, marked by industrialization. The major factors leading to the implementation were the labor unrest and social welfare movements around that time. They were focused on ending exploitative labor practices and lessening the widespread inequality in capitalist economies. These laws led to an outbreak among the developing labor market laws. The regulations surrounding minimum wage play a significant role in the overall economic discourse by primarily affecting employment. A detailed examination of minimum wage laws will give us some idea about how they affect labor market dynamics, income inequality, and The Impact of Minimum Wage Laws on Employment 3 poverty reduction. This examination can then help policymakers make well-informed decisions. Policymakers, economists, and stakeholders have also recently shown keen interest in the present debates centering on the implementation of minimum wage laws. The central topic of discussion of this paper is to analyze if the minimum wage regulations improve the lives of low-paid workers without unreasonably restricting their ability to find employment. Therefore, we try to address the confusion regarding the trade-off patterns. This needs to be done by analyzing all the literature and the factors affecting the labor market. The analyzing mechanisms range from the traditional principles of neoclassical economics to labor market segmentation theory and the overall developing paradigms of the labor market. The minimum salary limitations disturb market equilibrium and cause low-skilled people to become unemployed. While some studies indicate only a mere effect on employment, others demonstrate a negative correlation between minimum wages and employment levels, particularly among vulnerable demographic groups. These disparate results highlight the diversity in the labor markets. Minimum wage regulations significantly affect poverty alleviation and inequality reduction outside of the job sector, reflecting the more considerable demands of social justice and economic parity. Research conducted worldwide highlights the redistributive effect of minimum wages, indicating its effectiveness in increasing low-paid workers' earnings and reducing pay gaps. Minimum wage laws are potent instruments for reducing working poverty and income inequality in industrialized and developing nations. This paper will explore the complex link between employment and these laws, analyzing both empirical data and theoretical foundations to provide some intuitions about the effectiveness of minimum wage regulations. JLITERATURE REVIEW The Impact of Minimum Wage Laws on Employment 4 There has been abundant work in this field over recent years. This paper examines only some of the many relevant works in labor economics. We can start by examining some essential original contributions. The first is the minimum wage rules in the more extensive labor market laws and economic policy framework. The ramifications of minimum wage modifications are investigated through theoretical frameworks, which also include labor market segmentation, neoclassical economics, and labor market monopsony (Lang & Dickens, 2017). Additionally, a critical evaluation of empirical research is carried out to evaluate the effects of minimum wage adjustments on different socioeconomic aspects. The consequences of minimum wages are clarified by examining research from respectable economics publications, such as the Journal of Economic Literature and Economic Perspectives (Mudronova, 2016). The various methodological stances are captured through reviewing variables, including employment rates, poverty rates, salary distribution, and economic stability. Jana Mudronova examines how minimum wages, inequality, and poverty are related internationally, emphasizing possible ramifications for South Africa. The study draws on research from developed and developing nations and summarises the currently available data about the effects of minimum wage policies on reducing inequality and poverty. The study explains how income inequality is on the rise internationally and domestically in South Africa, focusing on the role that wage-income disparity plays in causing total inequality. In South Africa, wage-income disparity is still substantial despite rises in average actual salaries, which adds to the country's high rates of working poverty. It also explains that minimum wages are essential for lowering pay disparities and enhancing the welfare of low-paid workers. Studies conducted in the US and the UK demonstrate the effect of minimum wage laws on lowering pay disparity. Reductions in the income disparity have been The Impact of Minimum Wage Laws on Employment 5 attributed to the rises in the real minimum wages. The minimum salaries positively impact earnings in the unorganized sector, as explained in the paper. The paper explains a lighthouse effect that also applies to minimum wages in South Africa and other nations when they affect earnings in the official and informal sectors. The minimum salaries have been linked to decreased poverty in several emerging nations, like India. The study also concludes that a major fraction of low-paid workers in developing countries originate from low-income families, underscoring the possibility that minimum wage laws might reduce poverty. Another study looks into how different demographic groups, like women, minorities, teenagers, and unskilled workers—are affected differently by minimum wage laws (Amar & Pratama, 2020). Insights regarding the consequences of fairness and social justice are obtained through an analysis of the intersections between minimum wage legislation and demographic variables. The policy trade-offs between employment and income distribution are closely examined to clarify the intricacies involved in designing minimum wage policies (Atkinson et al., 2017). When analyzing the advantages and disadvantages of modifying the minimum wage, decision-makers may balance social justice and economic efficiency. The working paper "The Impact of Minimum Wages on Employment: Evidence from a Lower Middle-Income Country" by Nguyen Cuong Viet examines to the current discussion by concentrating on the setting of a lower-middle-income nation. The purpose of the study is to present actual data on how minimum wage laws affect employment dynamics in this particular context. The study is a quantitative approach, analyzing the effects of minimum wage changes on key employment indicators using econometric methods. Using rigorous statistical methodologies, Nguyen Cuong Viet aims to provide solid empirical data to support policy discussions regarding minimum wage legislation in lower- and middle-income nations. The study explains that the average real minimum wage grew by around 4% annually. We/n ECO 359 - Read and Write Effectively in Economics Written by Professor Núria Quella Isla ***** Guidelines for your Final Version (third and last deliverable) After writing your First Draft you now must proceed to complete the Final Version of your paper. You will work on your Conclusions (if you have not finished this section) and review your Introduction. Review also your title and key words to make sure they are truly representative of your work. Leave your Abstract to the very last (see below).¹ Finally, when you are confident that nothing is missing, go over your entire paper: edit your content and review your Final Version for grammar, organization, and style. During this process keep in mind your audience is composed of your peers and the economics faculty, not the general public. Check one last time the sample papers and use them as a model. How to Proceed First, before you start working on the Final Version of your paper, re-read your Draft and the previous set of Guidelines. Then STOP and think: make an honest appraisal of how close your Draft is to become your Final Version. ➡ Make a list (for yourself) of the elements that you think are missing or incomplete. Then take a realistic look at how much time you have to work on your paper. Can you accomplish it? If you are not sure: re-evaluate the objective, scope, and focus of your paper and think how you can still complete a paper that your audience will be interested in reading. Better to have a paper with a narrower scope that is complete than a very ambitious paper that appears incomplete. Second, make sure you are not forcing your audience to do your work (they will not): ✓ State clearly the purpose of your research. ✓ Check that your references include enough academic and scholarly sources. ✓ Have all references ready and in APA style. In your Literature Review (or in your Background Review), do not present your audience with a list or a recount of works related to your topic. Structure, summarize, and analyze your information and references in order to create your own ‘fruit smoothie' (refer to previous Guidelines on this subject). Point out what is known and not known about this subject. ✓ Reflect on how this information and these references relate to your specific research purpose. Then explain it to your audience in a direct, clear and self-contained manner. ✓ Tell your audience what to look for in your graphs, tables, figures, etc. They must illustrate your point. It is not enough that they are there. ✓ Spell out what the result or findings of your work are: What did you set out to do? Have you accomplished it? Why or why not? What did you find out? How is it relevant? Are there strong policy implications? ✓ Use the above to write/complete your Conclusions section, and to present a summary of it in your Introduction.2 1 Note that, although the Abstract is the very last section you will complete, it appears in the cover page, right under the Title, author's name and affiliation and before the Key Words. By now you know the order in which you write a paper is not the order in which it appears. You have seen this in your scholarly references and sample papers (use links provided in previous Guidelines). Note it is possible you clearly conclude there is no scholarly consensus on a particular topic or that not sufficient research has been conducted. This, in and of itself, is of value to your audience: they did not know this until you told them. 1 If you have not done the above, you are not done yet: you do not have a complete paper, you are still at the Draft stage. Third, when you decide your paper is complete, proceed on to the editing. Use all the tools to your disposal: run your paper through Spell Check and Grammar Check. Address all the red flags. Make sure you do this one last time before you submit the very final version of your paper. And do not forget to number your pages! Fourth, review the organization of your paper. At the very least: . · Check the headings of your sections accurately describe the content of your sections. Make sure your sections are in the correct order. You want to discuss your topic in a sequence that is logic and understandable. You want to have a story to tell, a clear narrative. Examine your paragraphs: are they well organized? Do they lead one into the next smoothly? Logically? Make sure your transitional phrases are effective and logical (e.g. on the other hand, in other words, consequently, for the most part, etc.). Otherwise, eliminate them. Fifth, review your paper for content and style. • • • Go over each section and make sure all that is needed is there. Eliminate what is not relevant. Relegate to a footnote what is of secondary importance or what would distract your reader from the point you are making.³ Eliminate repetitions. Make clear where you have presented original thoughts and where you have used other sources. Verify your sources are ALL documented (APA style). Verify also all your sources are listed in your Reference section and vice versa. Make sure all your numbers, facts, observations are substantiated. Check your key words. Are they descriptive and revealing of your work? Relevant? Specific enough? Ponder over your title. Assess how descriptive it is. Sixth, read your paper a few times. Then, proceed to the very last piece: the Abstract. Make sure the Abstract is a STAND-ALONE piece and that it is, at most, 200 words. You may find this is quite difficult, but it must be done. It will force you to think hard and select what is most relevant about your paper and how to communicate it effectively to your audience. • Make sure your Abstract is as concrete as possible and that it is self-contained. Since the Abstract is a summary of your paper, you may want to use the following elements: ○ Sentence about the overall issue addressed in your paper. O Indicate the main aim or purpose of the study. Point to the academic or practical importance of the study. ○ Methodology used. ○ Summary of main findings/conclusions. ○ Highlight of main implications. 3 If what you would like to include is of interest but too long to be in a footnote, consider adding an appendix, name it (Appendix A, Appendix B, etc.) and let the reader know it exists. E.g. The interested reader can consult Appendix A for a more detailed explanation of... Place the appendix after your References page and do not include it in the pagination of your paper. Appendices can contain a glossary with technical terms, a map, certain charts or graphs, interviews, mathematical proofs, etc. 4 Most word processors have word count functions. Use them. 2 • Nothing should be in the Abstract that is not in the main body of your paper. Moreover, the paper should be complete without the Abstract (this is why you write the Abstract after you have completed the paper). Avoid including citations in your Abstract. Even though it is not unheard of to have them, they will subtract valuable space from other, more important content. And, seventh, format your List of References and make sure it contains all references cited within your paper. The List of References must appear at the end, following the body of the paper and before appendices (if there are any). The List of References should be in the same style used in the body of the paper (APA); however, the bibliographic citation is almost always in a different format than the in-text citation. In your paper: 1. Your List of References should be in 12pt font size. 2. Each reference should be single spaced; references should be separated by a double space. 3. Each reference must have a hanging indent of ½ inch. 4. List should be alphabetical by author or editor. If you have done all this, congratulations!!! Good job, you have completed your research and you have a paper! 3