The article review reflects upon the advantages and disadvantages of increase in minimum wage. In this section we would try to understand the meaning of minimum wage and we would also define the economic theory of minimum wage.
Minimum Wage Theory
Minimum wage theory is the least wage fixed by the local government that has to be paid to the workers of the concerned nation. It is fixed by legal authority of every country and the companies have to comply with it. They are the lowest rate at which any employer can employ any employee. It is authorized by the government and is applicable on all the workers in the country (Francis, et al. 1996, p342). The minimum wages were decided for the first time in Australia and New Zealand in 1890s. Britain established its first trade boards in 1909 to set minimum wages in selected trades and industries. The minimum wages theory says that increasing the minimum wage above the market equilibrium will lead to less demand of unskilled labour. This would happen because the increase in minimum wage would decrease the output due to increase in the cost of production. In this paper we would further delve into this economic theory of minimum wage. We would also discuss the economic concepts which affect the minimum wage theory. We would also throw a light on whether increased minimum wage can improve the life of the unskilled labour. In the end we would try to analyze the measures necessary to be taken to reap the benefits of the increased minimum wage.