Question

4. Suppose you are interested in the impact of minimum wages on employment. You collect the following data on two jurisdictions:

Jurisdiction	Year	Employment (million)	Minimum wage
1	2005	2.6	15
1	2010	2.4	15
1	2015	2.1	16
2	2005	1.3	16
2	2010	1.4	16
2	2015	1.5	16

5. Consider the same data on minimum wages and employment from the previous question. You’re going to use this data to check whether the two jurisdictions had different trends in employment before the 2010-2015 period. In particular, imagine that the increase in the minimum wage in jurisdiction 1 happened between 2005 and 2010, not between 2010 and 2015. Continue to assume that there is no change in the minimum wage in jurisdiction 2. The “before and after” approach using the 2005 and 2010 data, with the imagined change in the minimum wage during this period, would show:

a) none of the listed options.

b) a negative relationship between the change in the minimum wage and the change in employment.

c) no relationship between the change in the minimum wage and the change in employment.

d) a positive relationship between the change in the minimum wage and the change in employment.

Answer 1

Hi

The answer of the following question is given below as follows.

So the correct option is OPTION B ie : A negative relationship between the change in the minimum wage and the change in employment.

Because The minimum wage is the wage rate established by government regulation that specifies the lowest rate at which the employer can employ labor. According to the supply and demand model and considering the approach before and after jurisdiction1 shown above between 2010 and 2015, the increase in the minimum wage (from 15 to 16) reduces the employment of workers with a minimum wage of 2.1 million to 2.4 million.so the Positive correlation is a relationship between two variables in which both variables move in the same direction. There is a positive correlation when one variable decreases as the other variable decreases, or one variable increases while the other increases.

Negative correlation or negative relationship is a relationship between two variables in which one variable increases as the other decreases and vice versa. Negative correlation or inverse correlation is a relationship between two variables by which they move in opposite directions.

I hope I have served the purpose well.

Thanks.