Minimum Wage

Minimum Wage 150 150 Affordable Capstone Projects Written from Scratch

Use a figure to illustrate the effects of a minimum wage that covers an entire labor market on the equilibrium number of workers employed, unemployment, and the wage bill (workers’ earnings: the wage times the number of hours worked). Use one or more figures (graphs) to show that the wage bill can increase or decrease given a small change in the minimum wage. Alternatively, you may use calculus.

 

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Whenever a minimum wage is imposed, no company is allowed to pay below the mandated amount. Most economists agree on the idea that minimum wage statutes are beneficial for some workers at the expense of others. However, the this argument is grounded in the assumption that money is the only means of compensation. The economists’ paradigm illustrates the impact that minimum wage laws have on the labor market (McKenzie). The effects are dependnent on the state of the labor market.

Figure 1. Effect of Minimum Wages on the Employment Opportunities.

 

In a  perfectly competitive labor market, the allocation of workers to firms is in equilibrium. The employers have no significant influence over the wages which is, primarily, determined by the market.


 

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