The upper earnings limit is the amount of income that is assessed for your national insurance contribution. Therefore, if the upper limit is increased, then the individual will be liable to pay more national insurance, so reducing disposable income.

It is very difficult to speculate on the likely impacts on the individual due to the complexities of income and substitution effects. Empirical studies on the topic of labour market reform highlight that broad statements are very misleading within this area.

University students can apply their knowledge of indifference curve analysis to illustrate changes in individual's behaviour.

The upper earnings limit for national insurance is set at £575. The input parameters range between £400 and no limit.

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