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econ 25 marker edwxcel paper 1 2021

hi my first exam is on wednesday and i’m sooo behind it took me around an hour to do this and ik it’s not to the best standard so can someone give me a rough mark and advice plsss

Discuss the disadvantages of a significant increase in the national living wage on a specific labour market such as that for social care workers

National minimum wage is the floor wage set by the government which employers can’t pay their workers less than. Not everybody earns the same, it’s differentiated by age, hours and degree. The aim is to improve living standards for lower income workers to reduce the levels of poverty across the uk. A higher minimum wage is likely to cause a fall in productivity amongst workers because there’s less of an incentive to work hard and produce more output since they’re guaranteed a decent wage. Therefore efficiency in the economy will fall, meaning not all resources will be allocated to maximise their capacity as the factors of production aren’t being used to their full potential. Employers are less willing to hire workers because the marginal cost of hiring each extra worker increases due to the minimum wage. So as there are job losses, some may be worse off as they no longer have a job. As this is an extra cost, there will end up being an excess supply of labour, so unemployment levels will increase. There will be a contraction for the demand of labour but extension for supply of labour.
However it might act as motivation for workers as there receiving a higher wage, so they’ll work harder. They will increase output which creates lower prices and higher output for firms. So their competition will increase, meaning there’s a greater opportunity to profit maximise and generate more revenue. It will mainly impact households that rely on one main earner, so their living standards will increase.
An elastic supply of labour is when a slight change in wages leads to small changes in employment levels. This is due to the level of skills required for the job, in this case social care workers, which you don’t necessarily need to be highly skilled to work in this position. A rise in minus wage leads to the substitutions of low skilled workers with other inputs. But it also has the income effect which is when a change in income levels leave to changes in consumption. This is because as the amount of real income consumers have fluctuates they buy different goods. having more disposable income leads to the consumption of more luxury goods and imports.This leads to more leakages which means the uk may not benefit in the long run and providing a minimum wage may just lead to brain drain. This would be government failure as the country’s economy will be doing worse if there are less injections, so firms won’t be making as much profit , therefore will invest less
However it prevents monopsony abuse as there are laws and regulations in place to ensure workers aren’t paid below the floor wage. So the inequality gap is reduced meaning social workers living standards will be improved. They won’t risk going against the minimum price scheme because of the fear of a whistleblower.
Having an elastic demad of labour means a slight change in wages has a slight change on the demand for labour. Labour has derived demand, so if there are less immigrants coming in, demand for social workers will fall. A floor wage may reduce the demand from employers to hire them even more but it depends on the proportion of labour costs to the total costs. Id the labour costs are high, demand will fall.
But if there’s a limited number of workers demand for, then customer service and quality of service may increase. Workers may feel encouraged to work more and be more productive, so efficiency will increase, meaning more profits for the firm and they have more money to invest in.

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