Question

What kind of policy measures can we come up with to reduce the negative impacts and increase the positive impacts of minimum wage? (This is a normative question, but try to use as much economic theory as you can to answer this part)

Answer 1

Positive impacts.

1 Minimum wages is the wage below which it is not allowed to pay the wages to labour force and it is good policy measure because it ensures that labour force can not be exploited by giving wages lesser than minimum.

2 Any wage over and above minimum wage as per skills of labour force will raise standard of living of people.

3 Minimum wages as well as any income over and above minimum wages will increase purchasing power of people and in turn demand for products and services will get infreincr.

4 Minimum wages will ensure that due to high demand of products due to high purchasing power of people, production will also get increased.

5 Minimum wages will ensure higher GDP level.

6 Minimum wages will ensure to decrease the poverty level and per capita income of the people

7 Minimum wages will ensure that minimum wages are paid to all workforce irrespective of gender, e.g. Male or Female

8 Minimum wages will increase the demand for quality products since people will get constant and high income as per their skills.