Minimum wage
Minimum wage in Nepalese Labor Market
Minimum wage is the price floor imposed by the government for the welfare of labor. Price floor is the legal minimum on the price at which a good can be sold. It is an attempt by the government to maintain prices at other than equilibrium levels. When a government imposes a price floor, there will be two cases. One the price floor is not binding if the price floor is maintained below equilibrium price level. In this case, the market forces naturally move the economy to the equilibrium level and the price floor has no effect. In other case when price floor is above equilibrium level, such price floor is binding. In this case the market price equals price floor as government imposes such control on prices for the welfare of labors. At this point the quantity supplied exceeds the quantity demanded which results in surplus of labor i.e. unemployment. Since the supply is high some seller are unable to sell all they want at the market price. The sellers who appeals to personal biases of the buyer, perhaps due to racial or family ties, are better able to sell their goods than those who do not. By contrast, in a free market, the price serves as the rationing mechanism, and sellers can sell all they want at the equilibrium price. The impact of minimum wage rate depends on the skill and experience of workers. Highly experienced and skilled workers are not affected because their equilibrium wages are above the minimum wages. Thus, the minimum wage raises the income of workers who have jobs but lowers the income of workers who cannot find jobs. A labor market with a binding minimum wage:
Minimum wage in context of Nepal:
Minimum wages dictate the lowest price for labor that any employer may pay. Wages of workers are considered a principal cause of industrial disputes in Nepal. The prevalence of a low wage rate has aggravated the extent of economic exploitation of employees. An assessment has reflected that employers
Minimum wage is the price floor imposed by the government for the welfare of labor. Price floor is the legal minimum on the price at which a good can be sold. It is an attempt by the government to maintain prices at other than equilibrium levels. When a government imposes a price floor, there will be two cases. One the price floor is not binding if the price floor is maintained below equilibrium price level. In this case, the market forces naturally move the economy to the equilibrium level and the price floor has no effect. In other case when price floor is above equilibrium level, such price floor is binding. In this case the market price equals price floor as government imposes such control on prices for the welfare of labors. At this point the quantity supplied exceeds the quantity demanded which results in surplus of labor i.e. unemployment. Since the supply is high some seller are unable to sell all they want at the market price. The sellers who appeals to personal biases of the buyer, perhaps due to racial or family ties, are better able to sell their goods than those who do not. By contrast, in a free market, the price serves as the rationing mechanism, and sellers can sell all they want at the equilibrium price. The impact of minimum wage rate depends on the skill and experience of workers. Highly experienced and skilled workers are not affected because their equilibrium wages are above the minimum wages. Thus, the minimum wage raises the income of workers who have jobs but lowers the income of workers who cannot find jobs. A labor market with a binding minimum wage:
Minimum wage in context of Nepal:
Minimum wages dictate the lowest price for labor that any employer may pay. Wages of workers are considered a principal cause of industrial disputes in Nepal. The prevalence of a low wage rate has aggravated the extent of economic exploitation of employees. An assessment has reflected that employers