1. Does raising the minimum wage cause unemployment of low-skilled workers, in general? 2. Does raising...

1. Does raising the minimum wage cause unemployment of low-skilled workers, in general?

2. Does raising the minimum wage cause inflation?

3. Does raising the minimum wage help to reduce poverty?

4. How does the cost of a Higher Education factor in to this discussion?

Solutions

Expert Solution

1. Yes raising the minimum wages causes unemployment of low skilled workers, in general as employers will now be forced to pay more in wages as a result they will hire fewer workers. This in turn will result in higher unemployment.

2. Raising minimum wages will cause wage push inflation in the economy which is the result of rise in price of wages. due to increase in minimum wages, business houses will charge higher prices for their goods and services in order to maintain their profit.

3. As we discussed above, rise in minimum wages will increase unemployment and price of goods and services. As a result , purchasing power of people reduce due increased price of goods and services. Those who were close to the poverty line, will be forced to move below the poverty line.

4. When Minimum wages will be raised , higher education institutions will be forced to raise the wages of their staff as a result the cost of higher education will be increased.

Rahul Sunny answered 1 year ago

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