A binding minimum wage results in:
A)higher wages for those who were working prior to the minimum wage implementation.
B)an increase in structural unemployment.
C)a decrease in the amount of cyclical unemployment.
D)lower actual unemployment rates, since higher wages encourage more people to enter the labor force.

Question

Quizplus · Accepted Answer

A binding minimum wage can result in an increase in structural unemployment as employers may choose to hire fewer workers or replace workers with technology to offset the higher labor costs. While it may increase wages for workers who were already employed prior to the implementation of the minimum wage, it may also make it more difficult for new and low-skilled workers to find jobs. It is also unlikely to have a significant impact on reducing cyclical unemployment, as that is influenced by broader macroeconomic factors. The claim that higher wages encourage more people to enter the labor force is not entirely clear-cut and may not hold in all cases.

A Binding Minimum Wage Results In