Does Minimum Wage Cause Unemployment?
Your analysis
should start first with a brief explanation of the problem
and its complexities. You should explain the
effects of the minimum wage laws in perfectly competitive
markets. Next, you should compare the size
of unemployment when the labor supply and demand are very
elastic with the results predicted when the
two curves are very inelastic. In addition, what happens
when the minimum wage is increased in a
monopsonistic labor market? You should carefully define all
terms and concepts and include all necessary
graphs that will help you explain your points more clearly.
Make sure that you properly label all graphs,
figures, and tables and appropriately refer to them in the
text.
Given that the effects of the minimum wage on employment
differ based on the assumptions made about
labor supply and demand (elastic vs. inelastic) and the
structure of the labor market (perfectly competitive
vs. monopsonistic) how can economists then try to find the
answer this question?
Carefully explain what methods economists could use to
explore this social issue. Evaluate the empirical
evidence and data and write your own interpretive analysis.
HINT: Can you think of few reasons why an increase in
minimum wage would not lead to an increase in
unemployment (besides the arguments you made under
monopsony)? Can you think of few reasons that
the unemployment would go up, even if the minimum wage stays
the same? How do the answers to these
questions impact the reliability of empirical data?
Due Date: December 5th , 2023. This project is worth 15% of
final grade!
Your submission file should include a title page with your
name, course name, project title, and date. All
the pages must be numbered! Your final submission should be
10 –12 pages in length (in addition to the
title page and references) and should use double spacing,
12-point Times New Roman font, one-inch
margins, and proper citations for references.
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