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Suppose that the wage distribution for a small town is as given here
Sector Number of Workers Wage ($)
A 50 $10 per hour
B 25 $5 per hour
C 25 $5 per hour
Assume that a minimum wage law is passed. It has no effect on the high wage sector A, but boosts wages to $7 per hour in sector B, while reducing employment to 20. Displaced workers from sector B move into the uncovered sector, C, where wages fall to $4.50 per hour. Has wage inequality risen or fallen? Explain, using three different ways to measure inequality.
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An increase in the reserve requirement would:
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