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Minimum Wage Influence on Economy and Society

Author: PanHongYu
Tutor: DengChunLing
School: Dongbei University of Finance
Course: Western Economics
Keywords: Minimum wage Employment effect Trade union & Social welfare Regulation
CLC: F224
Type: Master's thesis
Year: 2011
Downloads: 173
Quote: 0
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Abstract


The nature of the Minimum Wage System is that government increases the low-income workers’ wages above the equilibrium wage in the labor market through legislation. Under the circumstance of labor oversupply, the implementation of the Minimum Wage System will help improve the income level of low-income workers, safeguard the interests of low-income people and promote the harmonious development of society. For these purposes,80 percent of the world’s countries have been set up and implement a minimum wage system in 1994, China has implemented a nationwide minimum wage system. In fact, The minimum wage is a double-edged sword. Since the Minimum Wage System has been appeared, people have been arguing about whether it has the crowding-out effect on employment, negative effect on economic society or not and how to ensure that the minimum wage to be implemented. With rising prices, the minimum wage increase, these problems have been repeatedly mentioned, so, this article will explore these issues, on our research and implementation of the minimum wage system has a good theoretical and practical significance.The minimum wage is a double-edged sword. Since the Minimum Wage System has been appeared, people have been arguing about whether it has the crowding-out effect on employment, negative effect on economic society or not and how to ensure that the minimum wage to be implemented. The discussion of these issues has theoretical and practical significance.Compared with foreign countries, although it has been more than ten years since the implementation of the Minimum Wage System, the theory is controversial and the empirical analysis is also very poor. Therefore this paper considers the China’s economic environment as a starting point to reveal the phenomenon of employment and unemployment fluctuations and the status quo that employees were down pressed their wages and benefits in the rapid development of China’s current economic context after the implementation of the Minimum Wage System. This paper will also analyze the inappropriate trade unions, welfare system and government regulation.This paper will draw on the theory and research methods of impact which the overseas Minimum Wage System has on employment, and use the model to do empirical analysis on the employment impact of Liaoning Province minimum wage. It concludes that the increase of minimum wage has a negative effect on employment. At the same time, to analyze of the impact which the relative backwardness of trade unions and social welfare have on the Minimum Wage System on the basis of comparing the implementation of the minimum wage in other countries. Finally, this thesis will use Game Theory to analyze businesses, workers and government actions. It concludes that the government’s oversight is very important during the implementation of the minimum wage.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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