Question

the paper is talking about THE EFFECT OF MINIMUM WAGES ON LOW-WAGE JOBS∗

so what should be on the agenda for future research in this area, please explain in details

thank you

Answer 1

Introduction

Across the globe country's are developing ways and methods to deal with the problem of poverty and low income in groups that are most vulnerable.

One such method to increase the income and living standards of people is to deploy a method of minimum wages. Minimum wages are the least amount which is mandatory for an employer to pay to an employee working for them.

In developed economies, it is seen that this number is way higher than in developing or underdeveloped ones primarily because the cost of living in these countries is relatively much higher.

However, economists have long argued that like any other commodity, if the cost of an item or service increases, the supply side sees a rise, whereas the demand for it decreases. Same is the case with minimum wages what it does is that it increases the spending of companies who then shy away from giving permanent employment to people at low wages. Further, the demand gets reduced and companies look to automate processes and use better technologies in the long run which may help in reducing costs but reduce the overall unemployment in a country.

Future Research in the Area:-

The scope for future research in minimum wages must come from long term implications of over increasing minimum wages on the quality of jobs available to this group.

In the short run, the demand for jobs in the sectors remain stagnant. This is because companies have no other alternative but to hire people with existing technologies.

However, with increased costs, companies look towards automating processes and increasing expenditure on capital intensive techniques to reduce its increased spending.

Thus, future research on this area must take into consideration the long term effects of a price rise in labor demand and supply. Also the quality of labor force must be taken into consideration.

Both these must try and analyze if companies tend to shift their technique of production when labor force experiences an increase in costs or do they hire more skilled people to do a relatively less demanding job to cover up for their costs.

Please feel free to ask your doubts in the comments section if any.