Suppose the labor market is segmented into two distinct markets: the market for low-skill workers and the market for high-skill workers. Furthermore, suppose the competitive equilibrium wage in the low-skill market is $7.00/hour, while the competitive equilibrium wage in the high-skill market is $20.00/hour. If the minimum wage is set at $10.00/hour, which market will exhibit the greatest amount of unemployment? Demonstrate it graphically.

Suppose the labor market is segmented into two distinct markets: the market for low-skill workers and the market for high-skill workers. Furthermore, suppose the competitive equilibrium wage in the low-skill market is $7.00/hour, while the competitive equilibrium wage in the high-skill market is $20.00/hour. If the minimum wage is set at $10.00/hour, which market will exhibit the greatest amount of unemployment? Demonstrate it graphically.

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter10: Labor Market And Income Distribution

Section10.8: Discrimination

Problem 1YTE

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