1. Who is most likely to benefit from an increase in the minimum wage? why? 2. Who is most likely to lose from an increase in the minimum wage? why? 3. Who of those (in Question#2) might have thought an increase was in their best interest? why?
Added by James C.
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- Low-wage workers and their families are most likely to benefit from an increase in the minimum wage. This is because the direct effect of a higher minimum wage is that it increases the income of those currently earning at or near the minimum wage level. This can Show more…
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a.) Explain why voluntary transactions improve social welfare. What happens if transactions are forced? Can consumers get more or less happiness (holding their income/wealth constant) if they are forced into transactions they don't want versus being able to choose what transactions they participate in? b.) Most government policy decisions have winners and losers. What are the effects of raising the minimum wage? It is more complex than simply producers lose and workers gain. Who are the winners and who are the losers, and what exactly do they win and lose? To what extent does the policy change achieve its goals?
Jennifer S.
The following conversation was heard among four economists discussing whether the minimum wage should be increased: Economist A. "Increasing the minimum wage would reduce employment of minority teenagers." Economist B. "Increasing the minimum wage would represent an unwarranted interference with private relations between workers and their employers." Economist C. "Increasing the minimum wage would raise the incomes of some unskilled workers." Economist D. "Increasing the minimum wage would benefit higher-wage workers and would probably be supported by organized labor." Which of these economists are using positive analysis and which are using normative analysis in arriving at their conclusions? Which of these predictions might be tested with empirical data? How might such tests be conducted?
Policymakers sometimes propose laws requiring firms to give workers certain fringe benefits, such as health insurance or paid parental leave. Let's consider the effects of such a policy on the labor market. a. Suppose that a law required firms to give each worker 83 of fringe benefits for every hour that the worker is employed by the firm. How does this law affect the marginal profit that a firm earns from each worker at a given cash wage? How does the law affect the demand curve for labor? Draw your answer on a graph with the cash wage on the vertical axis. b. If there is no change in labor supply, how would this law affect employment and wages? c. Why might the labor-supply curve shift in response to this law? Would this shift in labor supply raise or lower the impact of the law on wages and employment? d. As discussed in Chapter 6 , minimum-wage laws keep the wages of some workers, particularly the unskilled and inexperienced, above the equilibrium level. What effect would a fringebenefit mandate have for these workers?
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