Understanding Minimum Wages and the National Living Wage in the UK

The video tutorial explores the concept of minimum wages, focusing on their effects on labor markets, advantages, and disadvantages. It delves into the UK minimum wage structure, historical trends, and international comparisons using the Big Mac index. The tutorial analyzes minimum wages in both competitive and monopsony markets, discussing the Keynesian and efficiency wage arguments. It evaluates the impact of minimum wages on employment, productivity, and poverty, and introduces the UK's National Living Wage, highlighting its implications and potential for age discrimination.

What is a minimum wage?

• The minimum amount an employer is legally required to pay an employee

• The maximum amount an employer can pay an employee

• A fixed salary for all employees

• A suggested wage by the government

In the UK, how is the minimum wage for apprentices different from other workers?

• It is only applicable to those over 25

• It is the same as for all other workers

• It is lower to encourage firms to hire apprentices

• It is higher to encourage more apprenticeships

What is the Big Mac Index used for?

• To measure inflation rates

• To determine the cost of living in different cities

• To set the minimum wage rates

• To compare minimum wage purchasing power across countries

What happens when a minimum wage is set below the equilibrium wage in a competitive market?

• It has no effect on the market

• It decreases wages

• It causes unemployment

• It increases employment

How does a minimum wage affect a monopsony labor market?

• It has no effect

• It decreases employment

• It can increase employment if set correctly

• It reduces wages

How can minimum wages potentially reduce poverty?

• By increasing the wages of high-income earners

• By ensuring all workers earn above the poverty threshold

• By reducing the number of jobs available

• By increasing taxes on the wealthy

What is a potential disadvantage of setting a high minimum wage?

• It can result in higher unemployment

• It can cause inflation to decrease

• It can lead to increased employment

• It can reduce the cost of living

What is one argument in favor of higher minimum wages?

• They reduce the number of jobs

• They decrease consumer spending

• They increase income inequality

• They boost aggregate demand through higher consumption

What is the National Living Wage in the UK?

• A wage set only for London

• A wage that varies by industry

• A rebranded minimum wage with a higher rate

• A wage applicable only to those under 25

Why might the National Living Wage not apply to those under 25?

• To encourage hiring of younger workers

• Because they are considered less productive

• To reduce the cost of education

• Because they are not part of the workforce