Pros And Cons Of Minimum Wage Legislation

Minimum wage legislation is a widely used policy tool put in place to increase wages of low-skilled workers. A minimum wage is usually the legal minimum wage(hourly, daily or monthly) that an employer can pay to employees. While many argue the numerous rationales of implementing a minimum wage, others find that the implementation of minimum wage can bring about harm. Among others, some benefits of minimum wage legislation include: protection of workers from exploitation by employers/firms, reducing inequality in the workforce, reducing poverty by increasing the standard of living of workers, and boosting employee’s performance in the workforce. On the other hand, those who argue against minimum wage legislation say it leads to unemployment and brings about unnecessary hardships(for example, the reduction of fringe benefits like inexpensive insurance, paid vacation, on-the-job training and other medical benefits) to the employees it was meant to help. Regardless of the advantages and the disadvantages of minimum wage legislation, the impact of minimum wage legislation depends on the kind of labor market it is affecting.
While this result is driven by low frequency variation in the data (corresponding to cycles of 6 years or more where minimum wage elasticity is at the upper end of the range of estimates), they also find that at high frequencies, elasticity is positive and insignificant. Rather than providing another view on the effects of minimum wage legislation in the U.S in a similar episode like their colleagues, Baker et al looked at minimum wage legislation in Canada where minimum wage is under provincial jurisdiction rather than federal but the latter in control of minimum wage regarding federal