EC 201 11-12-08 - EC 201 Minimum wage law o o o If min <...

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EC 201 11-12-08 Minimum wage law o If min < equil, no direct effect o If min < equil, but law not enforced, little effect o If min > equil, + law is enforced Labor surplus: involuntary employment Among low-wage workers, winners: keep job, earn more, losers: lose job Net effect on total payments to workers depends on shape of labor D curve If labor D inelastic, total pmts. ↑ If labor D elastic, total pmts. ↓ o Earned income tax credit Ford, Reagan, Bush, Clinton Earnings subsidy to workers in low-income families Advantages of EITC rel. to min. wage 1. EITC stimulates work 2. Targeted to low-income families Unions o Natl. Labor Relations Act 1935 Easier for unions to organize By early 1950s, ~ 1/3 of US workers unionized Since 1950s, # of workers unionized in US constant Size of work force ↑ % of US work force unionized↓↓ Now, 12.5 % unionized Private sector: < 10% unionized
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Public sector: > 1/3 unionized
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EC 201 11-12-08 - EC 201 Minimum wage law o o o If min <...

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