The UK government made a pledge to increase the number of apprenticeships to three million by...

The UK government made a pledge to increase the number of apprenticeships to three million by 2020 as part of a broader initiative to encourage more young people into vocational training. An apprenticeship is a system for training a new generation of practitioners of a trade profession with the on-the-job training and often some accompanying study. The minimum wage for young (16-18) apprentices was increased significantly in October 2015, from £3.30 to £3.90 per hour. Explore the effect of such an increase? Please add graphs to represent the effect. What data would you need to measure the effect of an increase in the minimum wage for young apprentices?

Solutions

Expert Solution

Minimum wages are the wages imposed by the governemnt above the equilibrium wages.

This is also known as price floor in the economics.

Due to minimum wages, Supply is more than the Demand which often leads to surplus in the market.

There will be unemployment in the market.

The employers are definitely worse off due to price floor as their cost has increased due to rise in wages but impact on workers market ( demand side ) is ambigious.

Those workers who get a job are better off but those who are not able to get a job because of reduced demand are worse off.

Price floor leads to ineffciency in the market.

We can look at the unemployment data of the country to look at the consequences of minimum wage.

Rahul Sunny answered 1 year ago

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