Do Increases in the Wage Rate Always Lead to Reductions in the Level of Employment?

The train of unemployment in the economy is down to the demand for effort to produce souseds desired output, to cater to the needs of their customers. The apostrophize of push is normally desirable to firms at a lower cost, as most firms objectives is profit maximisation which is achieved at the equilibrium whereby cost of production is at its lowest. In this essay I go out be critically analysing whether or not an ontogeny in the rate always leads to the reduction in the level unemployment. I will be doing so with the help of reviewing and contrasting 2 economic schools of thoughts (Monetarist and Keynesian). An increase in wages can be the result of forced action from government intervention or from the intervention of trade union in the form of an increase in the imposed minimum wage, threats of strikes if wages arnt etc. The scruple is does the increase in wages help to decrease the level of the unemployment rate or does it have an adverse affect on the level of unemployment.

Common sense would tell anyone that normally on a basic level if there is an increase in the wage rate firms would find it very difficult to kick upstairs new employees as their costs increase as they are paying out more in the form of wages to the current level of employees, this could be a big disincentive to employ more labor party, also could be a threat to current employees jobs as costs have increased the firm may lay of workers to reduce these incurred costs. However, there are many a(prenominal) more factors that play part in the determination on whether a firm will employ more wad whilst wages have increased. The price of a commodity is sensibly of a good indication of the quality of the good. Regarding this belief to the labour market an increase in wages will lastly mean that the quality of workers would also increase concerning their productivity and efficiency. pocket Webber stated in The Protestant Ethic and the Spirit of capitalism, that low wages are by no center related to cheap labour and... If you want to get a full essay, order it on our website: Ordercustompaper.com

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