TOWARDS A RENEWED PERSPECTIVE ON TEACHING MINIMUM WAGE
Keywords:
minimum wage, disemployment effect, profile of minimum wage worker, monopsonyAbstract
The objective in this paper is to show how the textbook treatment of minimum wage can be enhanced. This is done by contrasting textbook material with that from the popular press and think tank analyses and by including a review of the empirical evidence. Three extensions of the standard model on minimum wage are delineated –the use of an inelastic demand curve for labor, incorporation of the boom and bust cycle,and the monopsony model. The debate around the profile of the minimum wage worker is introduced to show students how data can be marshalled by opposing sides of the debate. A simple exercise on the disemployment effect is also introduced in a bid to motivate students with real life data. These enhancements to the textbook material offer a more comprehensive understanding than the simplistic standard model.
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Copyright (c) 2020 Junaid B. Jahangir
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