The data shows that an increase in the Provincial Minimum Wage of 60% in City A in 1999 did not lead to an increase in unemployment. On the other hand, the same amount of increase in the Provincial Minimum Wage in City B actually causes the number of unemployed to increase. According to one economist, this is because the calculation of the increase in the Provincial Minimum Wage in City B does not pay attention to the amount of wages that should apply, so that it is burdensome for entrepreneurs and they are forced to lay off their workers. You are asked to provide a theoretical basis (with a labor supply-demand curve) why an increase in the minimum wage in City A and City B, despite having similar increases, has different effects.

The data shows that an increase in the Provincial Minimum Wage of 60% in City A in 1999 did not lead to an increase in unemployment. On the other hand, the same amount of increase in the Provincial Minimum Wage in City B actually causes the number of unemployed to increase. According to one economist, this is because the calculation of the increase in the Provincial Minimum Wage in City B does not pay attention to the amount of wages that should apply, so that it is burdensome for entrepreneurs and they are forced to lay off their workers. You are asked to provide a theoretical basis (with a labor supply-demand curve) why an increase in the minimum wage in City A and City B, despite having similar increases, has different effects.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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None
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