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Minimum Wage in Hong Kong

In: Business and Management

Submitted By jdemers
Words 3925
Pages 16
Minimum wage in Hong Kong

Table of Contents

1. Part 1: Minimum Wage law in Hong Kong 2

2. Introduction 2

3. Minimum Wage – Economic Theory 2

4. Introduction in Hong Kong – May 2010 3

5. Impacts – 15 months later 5

5.1. Employment 5

5.2. Firms profitability 6

5.3. Inflation 7

6. Economic cycle considerations 9

7. Part 2: Housing issues in Hong Kong 9

8. Introduction 9

9. Housing situation in Hong Kong 9

10. Housing Demand in Hong Kong 11

11. Housing supply in Hong Kong 14

12. The Current Government Policies 15

12.1. Policy 1: 15

12.2. Policy 2 16

12.3. Policy 3 16

13. Conclusion 17

14. Bibliography 18

Part 1: Minimum Wage law in Hong Kong

Introduction

The Hong Kong Government introduced of a Minimum Wage in Hong Kong in May 2011, in response to increased incomes disparity in the territory. It uses economic theory to predict certain impacts such as level of employment, profits of firms, inflation effect and potential positive effects on the economy in general.

Minimum Wage – Economic Theory

Economic theory tells us that when artificial price floors are introduced in the market, they force prices to remain above the level that balances supply and demand. The same is true with minimum wage; it raises the quantity of labor supplied and reduces the quantity of labor demanded, it creates a surplus of labor that translates into unemployment (see figure 1).
[pic]
Figure 1: Price floor created by minimum wage

In summary the minimum wage causes the following: ← Minimum wage act as a price floor ← Unemployment is proportional to the difference between minimum wage price and the natural employment price equilibrium ← Reduces the demand for

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