(Down below is my first official economics paper I have written. Please let me know what you think or if you have any feedback!)
This model was created to show the relationship between unemployment rates and the minimum wage to median wage ratio of different countries listed from the OECD. It is interesting to note that generally in the economic community, it is often theorized that a higher minimum wage correlates with a higher unemployment rate. For example, in many European nations they are known to have a more progressive approach to their economy, and are known to have higher rates for their minimum wage in comparison with the U.S. Also, the Euro-zone tends to have a higher unemployment rate then the U.S (Liberty Street Economics).
To specifically describe this model, the independent variable is the minimum wage to median wage ratio. This ratio for each country was data taken from the OECD library. The dependent variable is the unemployment rate of each given country. This data on the unemployment rate was taken from the World Facebook, which was given on the CIA’s official website. It is interesting to note how significant the positive correlation is between having a higher minimum to median wage ratio, in comparison with having a higher unemployment rate. In other words, the countries that tend to have a higher minimum to median ratio tend to have a higher unemployment rate. Though it is unclear which variable causes the other variable, again many individuals in the economics community would likely agree that a higher minimum wage leads to a higher unemployment rate. One factor that stands out about this model compared to other models on minimum wage to unemployment is this model shows how high the minimum wage is relative to its own countries median wage, rather than unfairly comparing minimum wages across the world without considering how rich or poor the country is itself., As a result, this aspect of this model helps to give a better idea for a higher or lower minimum wage in comparison to a higher or lower unemployment rate.
Down below is the list of data that was used to create the model. It is important to note that two countries that were originally in this data set were later removed due to being such outliers in their unemployment rates. Rather then the countries being in alphabetical order, they are put from least to greatest in terms of their minimum to median wage ratio. This was done intentionally to help create the model. Again, the data on the minimum wage to median wage ratios was taken from the OECD library, and the data on the unemployment rates were taken from the World Facebook which was on the CIA’s website.
|Country||Minimum to Median wage||Unemployment Rate|
“COUNTRY COMPARISON :: UNEMPLOYMENT RATE.” Central Intelligence Agency, Central Intelligence Agency, http://www.cia.gov/library/publications/the-world-factbook/rankorder/2129rank.html.
Klitgaard, Thomas, and Richard Peck. “Comparing U.S. and Euro Area Unemployment Rates Liberty Street Economics.” Liberty Street Economics, libertystreeteconomics.newyorkfed.org/2014/02/comparing-us-and-euro-area-unemployment-rates.html.
“Minimum Wages Relative to Median Wages.” OECD Instance, OECD ILibrary, http://www.oecd-ilibrary.org/employment/data/earnings/minimum-wages-relative-to-median-wages_data-00313-en.