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A Study of the Effects of the Minimum Wage on Employment

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Essay

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 is considering raising the minimum wage from $7.25 per hour to $7.75 per hour.Based on this information, calculate the percentage change in the employment of low skilled workers.Use the midpoint formula.


Definitions:

Consumption

The purchase and use of goods and services by households. It is a primary component of GDP and an indicator of economic health.

Good

A Good is a tangible product that satisfies human wants or needs.

Kosher Foods

Foods that comply with a strict set of dietary rules in Judaism.

Elastic

A term describing a situation where the demand or supply of a good or service changes significantly when its price changes.

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