Answered: 5) Discuss the effectiveness of the…

5) Discuss the effectiveness of the minimum wage (and desirability) from the classical versus Keynesian perspectives. Briefly discuss the heterodox theories discussed in your class notes/videos.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: Earnings And Discrimination

Section: Chapter Questions

Problem 2PA

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Answer C only please On December 30, 1974, the hypothetical country Alpha decided to introduce a minimum wage policy. Cities with ID numbers 11, 23, 45, 57, 60, and 61 were randomly chosen to implement this minimum wage policy. The remaining cities in country Alpha did not adopt a minimum wage policy. You are asked to empirically and theoretically evaluate the impact of the introduction of the minimum wage in country Alpha on the labour market outcomes. a) Assuming there is no labour mobility and using the basic model of minimum wage, how do you expect the introduction of this policy to change the existing equilibrium wage and employment rate in the affected cities? MY ANSWER IS UNEMPLOYMENT DECREASES b)You are then asked to empirically evaluate the impact of the implementation of the minimum wage policy on employment rate in cities that implemented the new legislation compared to the other cities. Use data only from 1974, and 1975 in your policy evaluation. First, write down a…
On December 30, 1974, the hypothetical country Alpha decided to introduce a minimum wage policy. Cities with ID numbers 11, 23, 45, 57, 60, and 61 were randomly chosen to implement this minimum wage policy. The remaining cities in country Alpha did not adopt a minimum wage policy. You are asked to empirically and theoretically evaluate the impact of the introduction of the minimum wage in country Alpha on the labour market outcomes. Assuming there is no labour mobility and using the basic model of minimum wage, how do you expect the introduction of this policy to change the existing equilibrium wage and employment rate in the affected cities?
Minimum-wage laws and unemployment Consider the market for labor depicted by the demand and supply curves that follow. Complete the following table with the quantity of labor supplied and demanded if the wage is set at $12.50. Then indicate whether this wage will result in a shortage or a surplus. Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $12.50. Which of the following statements are true? Check all that apply. Binding minimum wages cause structural unemployment. in this labor market, a minimum wage of $9.50 would be binding. In the absence of price controls, a surplus puts downward pressure on wages until they fall to equilibrium. If the minimum wage is set at $12.50, the market will not reach equilibrium.
What happens to a supply curve when price changes but structural variables remain fixed? Provide an economic interpretation of this case.
What reasons do Arnold and Bowie give for doubting Maitland’s claim that improving employee wages will inevitably lead to more unemployment and poverty?
Proponents of the minimum wage argue that it will not reduce employment. Opponents argue the opposite. What factor determines who is correct in this debate, and under what condition will each side be correct? Use a diagram to explain your answer. Proponents of the minimum wage argue that it will not cause unemployment. Opponents argue the opposite. What two factors determines who is correct in this debate, and under what conditions will each side be correct? Use a diagram to explain your answer. Proponents of the minimum wage argue that it will not create deadweight loss. Opponents argue the opposite. Under what condition will each side be correct. In light of this, what do you conclude are the likely effects of a minimum wage?
Use the wage curve and the profit curve to show the equilibriumin a model of the labour market. Explain briefly why this equilibrium implies involuntary unemployment.
Using supply and demand analysis, show the effects a binding minimum wage in a labour market can have on wage and employment levels, VERY clearly.
On December 30, 1974, the hypothetical country Alpha decided to introduce a minimum wage policy. Cities with ID numbers 11, 23, 45, 57, 60, and 61 were randomly chosen to implement this minimum wage policy. The remaining cities in country Alpha did not adopt a minimum wage policy. You are asked to empirically and theoretically evaluate the impact of the introduction of the minimum wage in country Alpha on the labour market outcomes. Now suppose that there is mobility in the labour market in country Alpha and we are in the pre-minimum wage period. Country Alpha receives migrants from country Beta and these migrants are positively selected. a) Suppose country Alpha decides to adopt a welfare program to increase the minimum income of its workers. This minimum income is granted to all native workers, immigrant workers, and the new incoming immigrants. Using the Roy model, and ignoring how the program is funded, with the aid of a diagram, discuss how the welfare program changes the…
A government passes a family-friendly law that no companies can have evening, nighttime, or weekend hours, so that everyone can be home with their families during these times. Analyze the effect of this law using a demand and supply diagram for the labor market: first assuming that wages are flexible, and then assuming that wages are sticky downward.
How do minimum wages affect wages, employment, and unemployment? In a competitive labor market, the demand for workers is given as QD = 10,000 - 100W, and the supply of workers is given as QS = 2,000 + 1,900W, where Q is the quantity of workers employed and W is the hourly wage. What is the initial equilibrium wage and employment level? Suppose that the government decides that $5 per hour is the minimum allowable wage in any market. How would this new minimum wage alter this market? What would the new employment level be? What would happen to total payments to labor? Would there be any excess supply of labor? If so, how much?
Some economists argue that minimum wage policy does not always lead to the unemployment consequences that are so often predicted. For the sake of argument, grant that this is true. That is, due to the passage of say, a $15 minimum wage in Virginia, no one loses his or her job. Does this prove that minimum wage policy can improve the economic circumstances of unskilled laborers? Why or why not?