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Microeconomics Ll

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  • May 2013
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Question

Examine the possible effects of implementing a minimum wage in Malaysia from a microeconomic perspective.

Abstract

Minimum wages has always been a worldwide topic that is constantly argued in many countries. It has always been argued that once minimum wages is applied, there would not be enough competition among workers in the country. As a result, an important question had been brought out; who will benefits when the minimum wage rises? How is the distribution of income for poor families, and the high income interest ladder?

Summary

The minimum wage is a must meet or it must exceed all employment contracts stated for the employees. The wage levels under the Fair Labor Standards Act contained that minimum wage changes from time to time in order to adjust to the high prices from individual economic units; such as single-parent families, businesses or personal micro-finance issues. From the microeconomics view, the minimum wage would produce positive and negative impacts on enterprises, individuals (workers), and families of those earning the minimum wage rate.

The effect of minimum wage on workers

In the perspective of job motivation, with minimum wage, low-skilled workers do not know what to expect when they are out looking for a job. Job searching efforts could offset whereby; they would accept low-wage offer, as a result, it would be more conducive to low-skilled workers. Hence with the minimum wage rate,these workers would not consider to depend on the public assistance income, and would be actively looking for employment because the public income assistance offered by the NGO (Non Government Organization) is relatively low.As a result, more individuals would stop applying or depending on public assistance.

Secondly, the creation of employment opportunities would then be low. This is because of, "the instability of the economy and sometimes to avoid hiring new workers which is caused by the minimum wage rate", according...