Ontario Introduces Legislation Essay

The Ontario government has recently introduced changes to the employment and labour laws through its new plan “the Fair Workplaces and Better Jobs” (Ontario Introduces Legislation 2017). With this plan, the Ontario government attempts to “create more opportunity and security for workers” (Ontario Introduces Legislation 2017). Key points of this plan include an increase in minimum wage, a mandate for equal pay, new benefits such as paid sick days and stronger oversight of labour laws (Ontario Introduces Legislation). With this plan, the Ontario government tries to “create more opportunity and security for workers” (Ontario Introduces Legislation 2017). This essay will discuss the effects of a minimum wage in the labour market model and the Solow model, and conclude that a moderate minimum wage has little to no effects on overall employment but in the Solow model a higher wage can potentially increase investment and lead to more economic growth.

In the labour market model, we assume that households are the suppliers of labour and the businesses are the demanders of labour. Most importantly, the price of labour is wage. Then in a free labour market without minimum wage, the wage will settle at a point where quantities of labour demanded equal the quantities of labour supplied, called the equilibrium. Next, the premise of a minimum wage is to secure a wage for workers at a level above the equilibrium wage. At a high wage, people are understandably more willing to work. On the other hand, businesses are less willing to hire workers because the cost of labour has increased. As a result, the minimum wage creates a situation in the market whereby there are more labourers than the businesses can hire. In other words, there is now