According to the neoclassical view of labor markets

Assignment Help Business Economics

Reference no: EM131005916

a) According to the neoclassical view of labor markets, what is the likely effect of an increase in the federal minimum wage on the employment of low-wage workers? Describe and show graphically. What happens to the aggregate earnings of low-wage workers if the elasticity of the labor demand curve is greater than one in absolute value?

b) Describe briefly two empirical studies covered in class that examine the effects of minimum wage changes on the employment of low-wage workers. In your description, include the empirical methods (i.e., treatment and control groups) and the main findings of each study. Is this evidence consistent with the predictions of the neoclassical labor demand theory?

c) Suppose the governor of Ohio is considering raising the minimum wage and wants to forecast the effect of this increase on the employment of restaurant workers. To predict the employment effects, the governor’s analysts have applied a “difference-in-differences” approach utilizing the fact that Ohio increased the minimum wage from $7.00 to $7.30 on January 1, 2009, while Pennsylvania’s minimum wage did not change on January 1, 2009. From the estimation of changes in the employment of low-wage workers in Ohio from April 2008 to April 2009 relative to the changes in Pennsylvania during the same time period, they concluded that the minimum wage increase will cause a reduction in the employment of low-wage workers in Ohio. Explain under what conditions this difference-in-differences approach can be used to estimate the causal effect of the minimum wage increase on employment?

Reference no: EM131005916

Questions Cloud

Credit card-what is the effective interest rate : Quentin has been using his credit card too much. His plan is to use only cash until the balance of $8,574 is paid off. The credit card company charges 18% interest, compounded monthly. What is the effective interest rate? How much interest will he ow..

Why does feinberg think that this is unfair : Feinberg observes that in 1973 when he wrote his article, the top 5% of households in the USA gain 20% of the income in the USA while the bottom 20% of households gain 5% of the income. (In 2011, the top 5% of households in the USA gained 22.3% of th..

Types of externalities considered by economists : There are 4 types of externalities considered by economists. Positive consumption externalities, negative consumption externalities, positive production externalities, and negative production externalities. You are asked to perform a market analysis:..

Market to achieve economic efficiency is that the market : A condition necessary for a market to achieve economic efficiency is that the market:

According to the neoclassical view of labor markets : According to the neoclassical view of labor markets, what is the likely effect of an increase in the federal minimum wage on the employment of low-wage workers? Describe and show graphically. What happens to the aggregate earnings of low-wage workers..

What is the fundamental problem of causal inference : What is a counterfactual, and what is the fundamental problem of causal inference? How does random assignment of a treatment address this problem? Describe David Freedman’s views on whether applying econometric techniques (e.g., regression analysis) ..

What are the rules of derived demand for labor : What are the Marshall’s Rules of Derived Demand for labor? The North American Free Trade Agreement (NAFTA) – which came into force on January 1, 1994 – created a trilateral trade bloc between the United States, Canada and Mexico. One result of the ag..

Affordable care act-taken advantage of medicaid expansion : As you know, the Affordable Care Act expands coverage for low-income US citizens by giving them access to Medicaid. As you also know, not every state has taken advantage of this Medicaid expansion. What economic argument can you make for expanding Me..

Discussion about changing supply factor for the good : You and your boss are having a discussion about a changing supply factor for the good you bring to market. You manufacture widgets, specifically left-handed widgets for sale in the Maryland marketplace. Your boss has won awards celebrating her entrep..

User Account

All Pages