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As explained in Chapter 6, a minimum-wage law distorts the market for low-wage labor. To reduce thisdistortion, some economists advocate a two-tiered minimum-wage system, with a regular minimum wage for adult workers and a lower, "subminimum" wage for teenage workers. Give two reasons a single minimum wage might distort the labor market for teenage workers more than it would the market for adult workers.
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Okay. Question two, um, us explain in chapter six, a minimum wage law, three stores the market. So the question ist asking given to give two reasons. A single minimum wage, my disorder label market for teenage Bolger's more than it would for the market for adults workers. So first of all, if we look at this supply and the men charged for labor, we can see that right now the librium wages here they start. So first of all, if we said this, like minimum wage, say w lower bar here, the reason that this minimum wage is going to destroy the market is that with withing under this week, the quantity of labour, sir, pride is at this dot But the labor the man with is only this amount. So this gap here is he's called uncle appointment. So these people are unemployed, um, a boy, because with this high wage, they are willing to work. But firms are not willing to hire people who saw our employees. So this is why the the minimum wage is distorted, and the questions says that Okay, so thinks this is disordered. Some people suggest that we should set this minimum which for a doubts and then said another minimum wage for teenagers. Say toe a wage gore by prom. So if we said this, um, this, ah, minimum wage for teenagers, this part is also going to be the unemployed. But why is it better? So the? The reason is that no labor market supply off teenagers is not actually not the same as the doubts labours because teenage workers they are more flexible in terms ofthe labor supply. Supposed that. Okay, now it's summertime. And if you go to maybe, say McDonald's to work, you can. You can earn this amount of money, and now they raise the minimum wage. If you go to work in McDonald's, you can earn more. So swarm more and more students or, say, teenagers. They want working that McDonald's because comparing to go go to a mountain among the longs for their neighbor, they can earn more in McDonald's. So I'm saying that they're over. Supply curve is more elastic, so if their labours apply, curve is more elastic. If you spread colors, it is less steeper lest on going last steeper. Ah, sorry. I think I should just stroll another Kurt Uh ular Greg on the right hand side. So I'll remember on the lap inside it is the labor supply and demand for a doubts. So that's the 84 adults. And now this grab is for teenagers. 18. So I think, uh so the reason that this minimum wage is bad for them because they're labor supply. Kirby's more elastic because, compared to adults, they do not necessarily have to work during the summer, right? So once the wage of rice is all, everyone wants to work. But if the wages not that jai, everyone will just like, fool around or stay at home and watch you took channel because they do not have that high burden Teo really earn from are usually for something injures. They usually have not at high burden to, like, really have to earn a lot of money. They care about AA experience more, and also that the man curb is probably more elastic because employers think thatyou jurors are only going to go look for maybe a summer so it's been for them to hire, are more stable in tow employees. So if their supply demand curves are more elastic, say say any are any of us minimum wage is going to make weak distortion because even draw this my here we can see that. Oh, the unemployment gap. So the gap between supply and demon is really huge. So that is why this policy is causing more harm for going use your stand for adults.
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