User:MiloKing/MinWage

Mechanics

Basic structure of the minimum wage

Minimum wages are usually specified for work per unit time. For instance, a minimum wage might be imposed of $5 per hour worked.

Sources of minimum wage arrangements

Formally established minimum wages involve the government directly regulating labor arrangements to prevent employers from paying workers less than the minimum wage rate. There also exist some agreements between labor unions and businesses creating a minimum pay rate, but this can have some differences from the minimum wages we describe in this article.

Effects of minimum wages

The effects of minimum wages can be analyzed by considering them as price floors on the sale of labor. However, the effects can vary depending on the assumptions in the model, particularly regarding assumptions concerning the degree of market power. Whether a labor market is perfectly competitive or monopsonistic affects the analysis present. This analysis also is mainly in partial equilibrium.

Effects on quantity traded

In a perfectly competitive market, the effect on the equilibrium quantity tr

Effects on social surplus