Managerial Economics 12th Edition by Mark Hirschey

Exercise 7

"Oregon's minimum wage increased from $4.75 in 1996 to $5.50 in 1997, to $6 in 1998, and to $6.50 in 1999. According to a study by the Oregon Center for Public Policy, the minimum wage increases in Oregon did not harm welfare recipients' opportunities to find work. In fact, a larger percentage of welfare recipients in Oregon found jobs after the minimum wage increased than before the increases." Discuss how these facts could be consistent with a downwardsloping demand curve for unskilled labor.