The minimum wage: A motor for growth or a brake on the economy?

Let’s share our thoughts on a Basic Income instead of minimum wages that exploits workers. Creating jobs vs Creative Freedom💡💭 #BasisInkomen #Time4Change

European Parliamentary Research Service Blog

Written by Cemal Karakas

The minimum wage: A motor for growth or a brake on the economy? © gcpics / Fotolia.com

Setting minimum wages are a direct way for governments to influence wage levels. Even though they are one of the most analysed and debated topics in economics, their impact on (un-)employment, growth and poverty remains ambiguous. For some experts, the rise of minimum wages will lead to job losses, as it increases the cost of labour. Others argue that minimum wages not only prevent the creation of a ‘working poor’ class, but create jobs by increasing employee purchasing power. The empirical evidence from OECD countries does not provide a clear answer.

Over recent years, the focus of the debate has switched from the macro-economic effects to the social dimension of minimum wages. A statutory minimum wage is increasingly considered a useful tool to ensure fair wages and social inclusion.

The international financial crisis widened the gap on minimum wage levels between many…

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