Wednesday, February 13, 2013

Monoposny In Motion

The simple Econ 101 week 2 view of the minimum wage is that it will decrease employment. But the more complicated (and sensible) view of it is that the impact on employment is pretty ambiguous. Labor markets aren't perfectly competitive for a variety of reasons. Most employers have some monopsony power. To the extent that they do, small increases in the minimum age are unlikely to impact employment levels.