A Thesis On The Analysis Of The Rationality And Effectiveness Of The Minimum Wage System

Based on documentary method and deductive method,the research analyzed the rationality and effectiveness of the minimum wage system in view of psychology economics.First, it investigated the rationality of the minimum wage system, discussed whether or not the basic assumptions, the logical reasoning and the final conclusion which were the theoretical foundations of the minimum wage system were advisable, parsed the labor theory of value on account of the discourse of Bohm-Bawerk, found out that it had some loopholes on logical reasoning and limited range of interpretation, thus questioned the rationality of the minimum wage system.Then, it investigated the effectiveness of the minimum wage system, discussed whether or not the policy intention was matched with the results of the policy, after introducing the economic theory system as analysis tool, which was based on psychology economics in view of the individualism and the subjectivism methodology represented by Menger, speculated the effects the minimum wage system may bring to businesses,workers and the society, found out although it safeguarded the rights and interests of a few skilled technical workers, for these groups, the minimum wage system was effective, and the policy intention was matched with the results of the policy, it sacrificed the job opportunities for most of the skilled workers and young people who were about to step into the workplaces, at the same time they lost their source of life, the society could not acquire the products and services they ought to provide in their power, what is more important, scarce human resources counld not be configured to the highest value purpose, thus reduced the efficiency of the labour market and hindered the creation of social wealth, in the noneconomic field, the minimum wage system could also cause many social issues such as the increase of employment discrimination, the addition of social security expenditure and crime rate and the overflow of black labor market.Last, policy suggestions about the minimum wage system were given, which were based on the analysis of China’s economic structure and social welfare arrangements, advocated that the Chinese government could encourage the accumulation of capital and the enterprise competition to increase the rate of employment and wages to protect the life of the workers.