Evaluating the Impact of a Higher Minimum Wage

The video tutorial evaluates labor markets with a focus on the impact of a higher minimum wage. It discusses the conditions for minimum wage effectiveness, potential job losses, and economic trade-offs. The tutorial also explores factors influencing the impact of minimum wage changes, such as firm cash reserves and labor market conditions. It concludes with a discussion on the positive effects of minimum wage increases, including improved income distribution and increased purchasing power.

What is the primary condition for a minimum wage to effectively boost wages in an economy?

• It must be set below the current wage rate.

• It must be set at the current wage rate.

• It must be set above the current prevailing wage rate.

• It must be set equal to the National Living Wage.

What is one potential positive effect of a higher minimum wage on firms?

• Decreased spending on capital investment.

• Increased spending on capital investment.

• Reduced productivity of workers.

• Lower wages for low-skilled jobs.

What is a potential negative effect of a higher minimum wage on employment?

• Increased demand for workers.

• Creation of more low-skilled jobs.

• Real wage unemployment.

• Higher wages for all workers.

How might the size of a firm's cash reserves affect its response to a higher minimum wage?

• Firms with small cash reserves will not experience job losses.

• Firms with large cash reserves have more ability to invest.

• Firms with small cash reserves are more likely to invest.

• Firms with large cash reserves are less likely to invest.

What factor can influence the significance of job losses due to a higher minimum wage?

• The amount of government subsidies.

• The level of economic growth.

• The number of high-skilled workers.

• The size of the labor market.

How can a higher minimum wage potentially improve income distribution?

• By increasing wages for high-skilled workers.

• By reducing the number of jobs available.

• By decreasing wages for low-skilled workers.

• By increasing wages for low-skilled workers without affecting high-skilled workers.

According to the Keynesian argument, how does a higher minimum wage affect the economy?

• It decreases purchasing power.

• It fuels higher spending and positive externalities.

• It leads to lower wages for all workers.

• It reduces overall spending.