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Economic Costs and Benefits of Introducing Minimum Wage in a Competitive Labour Market

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Given that the parents are well educated, it is also expected that their children with have the equal opportunity for a good education. Aside from biological and cultural factors, industrialization has been pointed as the main cause of inequality which started between the agriculture and the industrial sectors. Industrialization can lead to a lesser demand for human resources. Therefore, increase in competition among the workers is possible. In line with this, the unequal resources such as the access to education between the rich and the less fortunate people resulted to a wider gap on the distribution of wealth between the two sectors of the society. Using the law of supply and demand, this study will examine the economic costs and benefits of introducing minimum wage within a competitive labor market. Eventually, whether or not there will be any changes in the economic cost and benefit analysis will be answered given that the only employer within the labor market is the monopsony. Minimum wage is referring to the minimum hourly, daily, or monthly wage wherein employers are required to pay the workers in exchange for their service. Specifically, in the UK, the minimum wage is £5.93 per hour (BBC News 2010). Normally, the government implements the minimum wage law in order to protect the socio-economic welfare of the workers from abusive employers. As a result of implementing a minimum wage law, workers could enjoy the benefit of improving their standard of living by actually removing poverty from the lives of the people (Daniel 2010. Filion 2009). Since employed individuals will be able to receive a minimum wage, these people will be able to enjoy the benefit of spending more money on purchasing their preferred basic commodities which are necessary in order to stimulate the national and international economic growth (Daniel 2010).