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A Study of the Effects of the Minimum Wage on Employment

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A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75.Suppose that the government of New Brunswick is considering raising the minimum wage from $10.00 per hour to $10.60 per hour.Based on this information, calculate the percentage change in the employment of low-skilled workers.Use the midpoint formula.


Definitions:

Economy's Output

The total value of all goods and services produced within an economy over a certain period.

Creative Destruction

A concept in economics where innovation leads to the demise of older technologies or industries, driving economic growth.

Medium of Exchange

An item that is widely accepted in transactions for goods and services because it simplifies trade and eliminates the need for a coincidental wants barter system.

Capital Good

Long-term assets used in the production of goods and services, such as machinery, buildings, and equipment.

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