MYTUTOR SUBJECT ANSWERS

100 views

Does a higher NMW increase the distribution of income?

This depends on a multitude of factors and is tricky to answer.

One of the ways in which a higher NMW, which the latest government is implementing, would reduce inequality, is simply because it raises wages of those in lower income families. This increases their disposable income and therefore their standard of living should rise.

However, this is not always the case; for two main reasons. The first of which is that around 40% of those on the NMW are secondary earners of richer households! Therefore money is not being efficirntly transferred from high earners to low earners.

Additionally, classical economists would argue that a wage floor leads to higher unemployment levels, as the cost of labour rises so firms will cut back on labour to lower costs. Therefore this would worsen the situation.

The answer to this question also depends upon the effects on productivity

Thomas  W. A Level Economics tutor, GCSE Economics tutor

3 months ago

Answered by Thomas , an A Level Economics tutor with MyTutor

Still stuck? Get one-to-one help from a personally interviewed subject specialist

49 SUBJECT SPECIALISTS

£20 /hr

Andrew B.

Degree: Economics L100 (Bachelors) - Exeter University

Subjects offered: Economics, Maths

Economics
Maths

“About Me: I am an economics student at Exeter University, I have a real passion for economics and how applicable it is to the world around us, and I hope my enthusiasm for it comes across in my tutorials and helps to inspire you! I'm...”

£20 /hr

Grace D.

Degree: Economics (Bachelors) - Newcastle University

Subjects offered: Economics, Maths+ 2 more

Economics
Maths
Geography
English

“About me:I am currently in my second year of an Economics degree at Newcastle Univeristy. I am very passionate about my subject and am a leading member of the Economics Society there, in addition to competing in various Business and ...”

£20 /hr

Anahita G.

Degree: Maths and Economics (Bachelors) - York University

Subjects offered: Economics, Science+ 3 more

Economics
Science
Maths
Chemistry
.TSA. Oxford.

“I am a maths and economics student at the University of York. I have always loved logical and analytical subjects, for example Maths and the Sciences. I also particularly enjoy economics as there are countless ways to analyse and conc...”

About the author

£20 /hr

Thomas W.

Degree: Philosophy, Politics and Economics (Bachelors) - Warwick University

Subjects offered: Economics

Economics

“About me Hello, my name is Tom and I read PPE (Philosophy, Politics and Economics) at Warwick, achieving A*A*A at A level in Maths, Economics and Biology respectively. I can't recall a time where i have not been fascinated bycurrent ...”

You may also like...

Posts by Thomas

Does a higher NMW increase the distribution of income?

What is economic growth and how can it improve living standards?

Other A Level Economics questions

What happens to the Production Possibility Frontier (PPF) when productivity only increases in one good?

What is GDP and is it a useful indicator to measure the standard of living?

Explain a policy that may reduce inequality in the United Kingdom

Evaluate the view that attempts by governments to eliminate market failure by intervening in markets for public goods and merits goods will inevitably lead to government failure.

View A Level Economics tutors

Cookies:

We use cookies to improve our service. By continuing to use this website, we'll assume that you're OK with this. Dismiss

mtw:mercury1:status:ok