Minimum Wage.pptx - Minimum Wage History of U.S Minimum Wage U.S – Fair Labor Standards Act(1938 Remained at $5.15 for many years until recent changes

Minimum Wage.pptx - Minimum Wage History of U.S Minimum...

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Minimum Wage
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History of U.S. Minimum Wage U.S. – Fair Labor Standards Act (1938) Remained at $5.15 for many years until recent changes Current federal minimum wage is $7.25
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Minimum Wage in the U.S.
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Competitive Model Assumptions: competitive markets, homogeneous labor, complete coverage If then no effect If then on the demand curve and employment falls In the case of monopsony, setting a minimum wage may increase both wage and employment
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Monopsony and Minimum Wage
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Offset As with employment mandates, employers can “undo” the effects of the policy In this case, they can reduce other non-wage benefits (fringe benefits, training) With minimum wage and general training, employers can offer less than optimal amounts of training Another possible outcome may be that employers can require more effort
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Empirical Results Many of the first generation studies were time series studies – comparing before and after Typically, employment-population ratio of teenagers (or other low wage groups) were studied Estimates of range between -.1 and -.3
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