Many Advocates of Raising the Minimum Wage Argue That the Adverse

question 136

Essay

Many advocates of raising the minimum wage argue that the adverse effects of such a move, for example higher unemployment, are likely to be small.Suppose the minimum wage is binding.Under what conditions will an increase in the minimum wage lead to only a small increase in unemployment?

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Definitions:

Flow-Through Entities

Business entities that pass their income, deductions, and credits down to their owners for tax purposes, avoiding taxation at the corporate level.

LLC's

Stands for Limited Liability Companies, a business structure in the U.S. that offers personal liability protection to its owners but can be taxed as a partnership.

S Corporations

A special designation of corporation that allows income to be taxed only at the shareholder level, avoiding double taxation.

Flow-Through Entities

Entities through which income flows to the owners or investors, avoiding corporate income tax.