Economics: Unemployment And Minimum Wage

UNEMPLOYMENT AND MINIMUM WAGE
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Unemployment Rate and Minimum Wage
In economics, the minimum wage tops one of the discussed and studied topics across many countries. This debate has attracted numerous studies and a large number of academic publications providing both the empirical and theoretical research regarding the magnitude of effect and direction. Countries like the United States, France, and Singapore have established constitutional acts that guide the issue of minimum wages in their respective economies. In the U.K., the National Minimum Wage Act was established in 1998 indicating a binding minimum pay across the country and became effective as from 1st April 1999 (Hafner, et al, 2016). However, over the years, there have been various debates about policies that guide rates of minimum wages which continues to vary each year. Therefore, this paper evaluates the impact of the minimum wage on unemployment rates in the country.
A study conducted by RAND Europe (2016) using a meta-analysis approach indicated various impacts of the U.K. national minimum wage (NMW) on employment. The objective of the study was to assess the employment retention effects, which is the probability of remaining at work after increasing the minimum wage. The findings compared an empirical study about the U.K. minimum wage, which was conducted by de Linde Leonard et al. (2014). The study looked at the effects of U.K. wage councils and other minimum wage measures published before 2012. The methodology of the study was meta-regression analysis. ‘Meta-analysis is a systematic review employing a range of statistical methods to synthesis and evaluate specific empirical literature. The meta-regression analysis was designed to analyze empirical research in economics and social sciences’ (Hafner et al., 2016, p.4) The systematic review method applied involved a search for academic literature in the relevant databases, a hand search of literature published by U.K. low pay commission (LPC).
The academic literature was obtained from EBSCO information service databases. Grey literature was obtained from three potentially authoritative sources of similar studies, and all LPC reports were obtained from LPC websites and achieved. The search of relevant materials was sorted using the subject search term ‘minimum wage’, using geographical delimiters and the key words of the study. Data collection was done by extraction of relevant information, estimates, a total number of observations, peer-reviewed journals, and data sets used for specific estimates. Out of this, 22 relevant materials were identified for further analysis out of 2,313 corresponding estimates. Criteria for further analysis were based on regression coefficients, a total number of observations, and standard error. Six studies were excluded as they did not meet these criteria. Based on the employment effect on NMW,241 estimated NMW elasticities were captured (Hafner et al., 2016, p.7-10).
The findings were as follows; based on the employment effects for labour market subgroups, it was realized that part-time employees were adversely affected by the NMW increases than other subgroups, irrespective of when uprating happened. Bas...