Question

What would a law and economics approach say about a minimum wage policy? What alternatives might it suggest?

Please explain in detail.

Answer 1

Minimum wages is nothing but “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract” on the whole.

According to the law, the amount of minimum wages can actually be set by statute, decision of a competent authority, a wage board, a wage council, or even by an industrial or labour courts or tribunals. At, times, these minimum wages can also be set by the law to the provisions of collective agreements on the whole. The driving aim of minimum wages is nothing but to  protect workers against unduly low pay.However economists argue that sometimes, minimum wage policy cannot be beneficial as it can rise the unemployment and in this regard, they have offered alternative solutions which include tax break where the taxation policies for the low grade workers are to be modified so that the wage problem can be solved.