Reference no: EM133063070

"Depending on whom you listen to, the Ontario government's move to jack up the minimum wage by nearly one-third will either be devastating for businesses and kill jobs or give a big boost to the economy as low-paid workers spend more. These are the polar opposite views coming from business and labour, the usual suspects in the never-ending debate about how much people should be paid. But the huge body of research into the economic impact of minimum wage hikes does not definitively support either conclusion.... 'Classical economics suggests there's going to be huge job losses, but studies indicate that's not likely to be the case,' said Bernie Wolf, economics professor at York University's Schulich School of Business." (CBC News · Posted: Jun 03, 2017)

(A) Describe how the Ontario government's policy on theminimum wage has changed over the period from 1995 to 2020 and outline the changes in the nominal minimum wageover that period.

(B) Compare the predicted employment effects of the introduction of a minimum wage in "classical economics" (i.e. a competitive labour market model) and a monopsony model where an employer has some degree of monopsony power. In your explanation, use diagrams where appropriate. Also provide an intuitive explanation for any different predictions in the competitive and monopsony models. Briefly review the empirical evidence on the employment effects of minimum wage increases and, in light of your theoretical analysis and your review of the evidence, discuss the assertion that the "studies indicate that huge job losses are not likely to be the case."