A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Question

Quizplus · Accepted Answer

A binding minimum wage, set above the equilibrium wage, increases the income of workers who remain employed at the higher wage. However, it can lead to unemployment for some workers if employers reduce the number of employees they can afford to hire at the higher wage, thereby lowering the incomes of those who cannot find jobs.

A Binding Minimum Wage Raises the Incomes of Some Workers