MinimumWages (1) - Minimum Wage Legislation Laura Salisbury...

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Minimum Wage Legislation Laura Salisbury ECON 3240: Labour Economics Fall 2016 Laura Salisbury (ECON 3240) Minimum Wage Legislation Fall 2016 1 / 21
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Minimum Wages Minimum wage: Price floor for labour Illegal to pay workers less than minimum wage Varies by province (rates as of 2016) Highest: Nunavut ($13 per hour) Lowest: Newfoundland & Labrador ($10.50 per hour) Ontario: $11.40 per hour Some workers under federal jurisdiction Laura Salisbury (ECON 3240) Minimum Wage Legislation Fall 2016 2 / 21
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Evolution of Minimum Wages Laura Salisbury (ECON 3240) Minimum Wage Legislation Fall 2016 3 / 21
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Why Minimum Wage? Why have a minimum wage? Poverty reduction Prevent low-wage competition Criticisms: Increases unemployment among low-wage workers This lecture: we will discuss consequences of minimum wage legislation. Laura Salisbury (ECON 3240) Minimum Wage Legislation Fall 2016 4 / 21
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Effects of Minimum Wage - Perfect Competition Minimum wage below equilibrium wage: Non-binding No effect on wages or employment Minimum wage above equilibrium wage: Binding Labour supplied > labour demanded Creates unemployment: N S - N D Laura Salisbury (ECON 3240) Minimum Wage Legislation Fall 2016 5 / 21
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Effects of Minimum Wage - Perfect Competition Laura Salisbury (ECON 3240) Minimum Wage Legislation Fall 2016 6 / 21
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Effects of Minimum Wage - Perfect Competition Define: N c = labour demanded/supplied without minimum wage N m = labour demanded under minimum wage N s = labour supplied under minimum wage Unemployment under minimum wage = N s - N m BUT: decrease in employment only N c - N m .
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