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.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 31P: Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes,...

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