The Effects Of Minimum Wage Policy On Labour Market And Unemployment Rate

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The Effects of Minimum Wage Policy on Labour Market and Unemployment Rate: Developed versus Developing Countries. The unemployment issue in labour market is a general issue in many countries, and this issue has been encountered for years. Governments in either developed or developing countries applies policies such as minimum wage policy, to stimulate employment and protect workers’ benefit in their society. However, there are some incidental side effects of minimum wage policy’s application. My paper will investigate how the minimum wage policy affects both labour market and unemployment rate in developed and developing countries, by using statistical data and multiple regressions. Principle Questions: The five studies used in this paper uses regression analysis to investigate this general issue based on labour market and unemployment rate. Is the minimum wage policy positively or negatively related to the labour market and unemployment rate? Does developed countries also suffer from this economic issue? And how does this policy affect both labour market and unemployment rate in different countries? Policy Relevance: The policy relates to the economic issue in my paper would be the minimum wage policy. Article #1: Feldmann, Horst. (2005) “Labour Market Institutions and Labour Market Performance in Transition Countries.” Post-Communist Economies, 17(1), 47-82. This paper analyses the impact of five certain types of labour market institution on the labour market performance of 12 transition countries. There was only one single study (Cazes, 2002) before this paper, but there are lots of weaknesses in that previous study, so the conclusions in that study are indirect and ambiguous. This paper used the observational data from... ... middle of paper ... ...ncy for the years 1990 to 1996. Also, there are estimates of the residents’ monthly minimum wage distribution for those two regions in Indonesia from the Indonesian Labour Survey. The survey is a random sample of approximately 65,000 households, or slightly more than 250,000 individuals across the nation. (Alatas & Cameron, 2008) They studies the impact of employment by comparing the differences between Jakarta and Botabek in those establishments, based on the average changes in the number of production. In sum, there is a negative employment impact of minimum wages on small establishments in Indonesia, but no significant adverse impact in large foreign and local establishments. The policy implication indicates that the government mainly focus on large firms when implementing the minimum wage policy. The government should protect small establishments’ benefit too.
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