ECONOMIC ISSUE

FACING FILIPINO
ENTREPRENEURS
PREPARED BY: GROUP 3
WAGES
DETERMINANTS OF MARKET WAGE RATES

A basic principle of Economics is the notion that the

price or value of goods, services, and even resources,
such as labor, is determined by the behavior of
DEMAND and SUPPLY
 LABOR DEMAND
- Similar to DEMAND FOR GOOD, and thus
follows the LAW OF DEMAND

- Similar to the law of demand, when the PRICE

OF LABOR INCREASES, the related
QUANTITY OF LABOR DECREASES, which
makaes the price of labor is inversely related to
the quantity of labor
 LABOR SUPPLY

- IT FOLLOWS THE PRINCIPLE LAW OF

SUPPLY

- IF THE PRCE OF LABOR INCREASES,

THEN THE SUPPLY OF LABOR ALSO
INCREASES, AND VICE VERSA.
 The market labor supply generally tends to curve
UPWARD, similar to supply curve of the goods and
services market or product market.

-Labor is much different from leisure. LABOR refers to

WORK RENDERED while LEISURE involves
ACTIVITIES THAT DOES NOT PAID TO DO.
 EQUILIBRIUM
• When THE LABOR DEMAND and
SUPPLY meet at a certain WAGE AND
QUANTITY OF WORKERS, an
EQUILIBRIUM is reached.

• The POINT OF EQUILIBRIUM is called

the MARKET CLEARING.
EQUILIBRIUM WAGES

COMPENSATING
DIFFERENTIAL is the difference
in wages that arise to offset the
nonmonetary characteristics of
different jobs (Mankiw 2005).
EQUILIBRIUM IN A COMPETITIVE LABOR MARKET
• In a perfectly comprtitive labor market, firms and
workers are free to enter and exit the market.
• A competitive equilibrium leads to an efficient
allocation of resources.
LABOR MARKET EQUILIBRIUM IN A COMPETITIVE MARKET
 MINIMUM WAGE
• THE LOWEST ALLOWED WAGE PAID
TO WORKERS BY VIRTUE OF
LEGISLATION AND GOVERNMENT
POLICIES.
• IS SET PRIMARILY TO PROTECT
WORKERS FROM ABUSIVE
EMPLOYMENT PRACTICES.
• MINIMUM WAGE RATES DIFFER PER
REGION IN THE COUNTRY.
LABOR MARKET WITH A MINIMUM WAGE
TAXES
 TAXES/TAXATION

TAXES are the lifeblood of the government.

Whithout it, the government will not be able
to provide services to its people, such as
public works, health, education, defense and
police protection, and social services while
TAXATION is the act of levying tax.
 PURPOSE OF TAXATION

(A) (B)
RAISING REVENUE TO
COVER THE STABILIZE THE
GOVERNMENT ECONOMY
EXPENDITURES
(C) (D)
ALTERING THE CONTROLLING THE
DISTRIBUTION OF VOLUME OF IMPORTS
INCOME AND AND EXPORTS OF A
WEALTH CERTAIN GOODS
TYPES OF
TAXES
There are 2 major divisions
of taxes, first is the
DIRECT AND INDIRECT
TAXES and the second one
is the PROGRESSIVE,
PROPORTIONAL, AND
REGRESSIVE TAXES
 DIRECT AND INDIRECT TAXES

DIRECT INDIRECT

Levied by government on the

income and wealth received by Taxes levied by
household and businesses.
Taxes that are levied on
the government
household are called on goods and
INDIVIDUAL INCOME
TAXES while Taxes on business
services.
are called CORPORATE
INCOME TAX.
 PROGRESSIVE,PROPORTIONAL,AND REGRESSIVE TAXES

PROGRESSIVE PROPORTIONAL REGRESSIVE TAXES

Are taxes that Are taxes
Are taxes
place greater that place an
burden on equal burden that fall
those best on the rich, more heavily
able to pay middle class, on the poor
and put little and poor than the rich
to no burden
to poor
 BASIC PRINCIPLES OF TAXATION

The basic principle of taxation refer to key concept that

guide government in designing and implementing an
equitable regime.

• ADEQUACY – Taxes should be just enough to generate revenue

required for the provision of essential public services.
• BROAD BASING – Taxes should be spread over as wide as possible
to all sectors of the population or economy.
• COMPATIBILITY – Taxes should be coordinated to ensure tax
neutrality.
CONVENIENCE – Taxes should be enforced in a manner that
facilitates voluntarily compliance.
EARMARKING – Taxes revenue from a specific source should be
dedicated to a specific purpose only.
EFFICIENCY – Tax collection efforts of the government should not
cost an inordinately high percentage of tax revenues.
EQUITY – Taxes should equally burden all individuals and entities in
similar economic circumstances.
NEUTRALITY – Taxes should not favor any one group or sectors
over another and should not be design to interfere with or influence
individual decision-making.
PREDICTABILITY – The collection of taxes should reinforce their
inevitability and regularity.
RESTRICTED EXEMPTION – Tax exemption must only be
done for specific purposes and within a limited period.
SIMPLICITY – Tax assessments and determination should be easily
understood by an average taxpayer.