Minimum Wage Economic Theory

These flashcards cover key concepts and findings related to the economic theory of minimum wage, its implications on the labor market, and the broader socio-economic discussions surrounding it.

What is the effect of setting a minimum wage above the equilibrium wage?

It creates a surplus of labor, increasing the quantity supplied by workers but decreasing the quantity demanded by employers, leading to unemployment.

What does a high minimum wage create in relation to job availability?

It prevents profitable jobs at wages below the legal minimum from being created.

How are the impacts of minimum wage increases on employment often misrepresented?

Research typically focuses on the number of jobs rather than the number of hours worked, missing gradual employment adjustments.

What is one consequence of increasing minimum wages regarding job growth?

High minimum wages generally lead to slower job growth as employers may not hire new workers.

Who are largely among the minimum wage workers?

Many minimum wage workers are teenagers from middle and upper class families, not the low-income individuals targeted by anti-poverty policies.

What principle remains true regardless of policy wishes regarding minimum wage?

The principles of economics hold, and they should inform policy decisions, regardless of personal beliefs or desires.

What is one potential negative effect of higher minimum wages on low-income workers?

It limits their opportunities to gain experience and skills in low-wage jobs, which can hinder upward mobility.

According to recent studies, which demographic is most negatively affected by minimum wage increases?

High school dropouts and minorities are most likely to face negative employment effects from minimum wage policies.

What is recommended for those interested in the minimum wage debate?

Watch the supplemental video debate on whether a $15 an hour minimum wage would be beneficial for Texas.