EPRS Admin By / September 24, 2015

Curve chart: relation between wages and employment

Curve chart: relation between wages and
employment

Curve chart: relation between wages and employment

The equilibrium wage (W0) would lead to full employment (L0) as supply and demand of labour are in balance. According to this theory, a binding or statutory minimum wage (W1) higher than the equilibrium wage increases the price for labour by artificially introducing a wage floor. The supply of labour (L1) would be larger than employer demand (L2). This would result in unemployment, since fewer workers are needed or employed.


Related Articles
Comments

Leave a Reply

%d bloggers like this: