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Wage Controls

Wage controls refer to a form of government intervention where a minimum or a maximum is imposed on wages. Imposing a minimum, or a floor, is aimed at securing a living wage for labor. Imposing a maximum, or a ceiling, on the other hand, is directed at curbing inflation. Wage controls are also considered as a social measure to prevent exploitation of labor. Wage controls are usually used in times of economic instability. Minimum wage, which was first introduced in the United States after the Great Depression, is an example of wage floors.

Some economists argue against wage floors. They contend that wage floors would create surpluses. Since wage floors cause wages to be higher than they would be under free market, employers would not ...

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