IELTS Writing Task 2: Work - Discuss Both Views Sample Answer

The economic effects of minimum wage increases have been debated by academics and policymakers for decades, with theoretical models and empirical evidence frequently pointing in different directions. Both positions have genuine intellectual merit, though the weight of recent evidence shifts my view towards the side that moderate increases do not significantly harm employment.

The traditional economic argument against minimum wage rises rests on standard supply and demand logic: if the price of labour is artificially elevated above its market-clearing level, employers will hire fewer workers, substituting capital for labour or reducing hours. This logic is compelling in competitive labour markets where employers are price-takers. For small businesses operating on thin margins in price-sensitive sectors such as retail and hospitality, a significant cost increase can trigger layoffs or business failure.

The counterargument, supported by a substantial body of natural experiment research, is that many labour markets are not perfectly competitive. Where employers have monopsony power - that is, the ability to set wages below competitive levels because workers lack outside options - a minimum wage floor actually increases employment by bringing wages closer to the competitive level. Economists Daron Acemoglu, Arindrajit Dube, and others have documented that US counties adjacent to state borders showed no systematic employment differences when one state raised its minimum wage and the other did not - contradicting the standard prediction of job losses. Furthermore, higher wages reduce staff turnover and absenteeism, partially offsetting cost increases.

My view is that moderate, incremental minimum wage increases indexed to inflation and regional living costs produce net positive outcomes for workers without the employment costs that larger sudden increases risk generating. The policy is sound when implemented carefully.