Economic Theory of Minimum Wage

The Economic Theory of Minimum Wage posits that setting a legal minimum pay for workers aims to ensure a basic standard of living. Advocates argue it helps reduce poverty and boosts consumer spending, benefiting the economy. Critics, however, suggest it can lead to job losses, as some employers may not afford to pay the higher wages and could cut jobs or reduce hours. The impact often varies by region and industry, making the effects of minimum wage laws a complex issue that balances worker welfare with employment dynamics.