Minimum wage

• What is the definition of minimum wage?


  Minimum wage is a legal minimum amount that employers must pay workers for their labor.
• What is the purpose of setting a minimum wage?


  To ensure workers receive a basic standard of living.
• What are the two types of minimum wage in the UK?

  The National Minimum Wage (NMW) for workers under 23 and the National Living Wage (NLW) for those 23 and over.
• How does a minimum wage function as a price floor?


  It is set above the equilibrium wage, preventing wages from falling below a certain level.
• If the equilibrium wage is £7 and the minimum wage is £8.50, what economic concept does this represent?


  Price floor
• What are the main rationales behind implementing a minimum wage?


  • Reduce poverty
  • Address income inequality
  • Protect vulnerable workers
  • Increase productivity
  • Stimulate economic growth
• What is one of the primary goals of minimum wage policies?


  To reduce poverty.
• How does minimum wage aim to address income inequality?


  By narrowing the gap between low and high earners.
• What are some potential benefits of minimum wage for low-wage workers?


  Increased income and improved living standards.
• What are the potential benefits of minimum wage for the economy?


  • Reduced poverty
  • Improved living standards
  • Increased consumer spending
  • Reduced income inequality
  • Increased worker motivation
  • Reduced employee turnover
• How might a minimum wage increase stimulate the economy?


  By increasing consumer spending.
• What are some potential drawbacks of minimum wage policies?


  Increased unemployment and higher prices for consumers.
• What are the typical negative consequences of minimum wage increases?


  • Increased unemployment
  • Reduced hours for workers
  • Higher prices for consumers
  • Reduced competitiveness of businesses
  • Substitution of low-skilled workers with technology
  • Growth of the informal economy
• What might businesses do in response to a minimum wage increase?


  Reduce their workforce or cut hours.
• How can minimum wage affect consumers?


  It may lead to higher prices for goods and services.
• How does minimum wage impact the government?


  It may reduce welfare spending but poses challenges in enforcement.
• How does minimum wage impact different stakeholders?


  • Low-wage workers: Higher income but potential job losses
  • Employers: Increased labor costs and potential automation
  • Consumers: Higher prices for goods and services
  • Government: Reduced welfare spending but enforcement challenges
  • Economy: Increased consumer spending but reduced competitiveness
• Which stakeholder group experiences both positive and negative effects from minimum wage increases?


  Low-wage workers.
• What is a potential benefit of minimum wage for the economy as a whole?


  Increased consumer spending.
• What is a potential drawback of minimum wage on a national scale?


  Reduced international competitiveness.