Suppose That, for Example, in India, a Minimum Wage Is

question 18

Essay

Suppose that, for example, in India, a minimum wage is instituted in the modern sector above the market-clearing wage, while the rural traditional wage is market determined at a lower level than in the modern sector.
a.Describe the impact of this policy on the rural labor force, urban unemployment, and the rural wage.
b.Will the modern-sector wage be equal to the traditional-sector wage after markets equilibrate through migration? Explain.
c.What effect might moving costs have on the equilibrium you described in Part (b)?
d. What effect might the introduction of factories to rural areas have on the equilibrium you described in Part (b)?

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Definitions:

Conscious Thought

The awareness of one's own mental processes, including thoughts, feelings, and sensations.

Unconscious Thought

A rephrased definition: The processing of information or decision-making that occurs without conscious awareness, influencing behaviors and attitudes.

Psychoanalysis

A set of psychological and psychotherapeutic theories and methods, originating in the work and theories of Sigmund Freud, aimed at exploring the unconscious motives that influence behavior.

Behaviorism

A psychological approach that emphasizes the study of observable behavior and the role of environmental forces in shaping it, often excluding subjective mental states from the study.