Answer to Question #109818 in Economics for Hi

Question

Foreign domestic helpers in Hong Kong are subject to an effective minimum wage. Due to Wuhan coronavirus, Hong Kong employers need to provide free hotel accommodation to newly employed foreign domestic helpers for their 14-day quarantine before the helpers can start to work. Besides, many workers in the Philippines have lost their jobs because of the outbreak of Wuhan coronavirus in the Philippines. With the aid of a diagram, explain how these would affect the time foreign domestic helpers need to wait before receiving a job offer from Hong Kong.

Answer 1

The increase in supply of labor without the decrease in equilibrium wages due to existance of minimal wage will create a surplus of labor, as a result this would affect the time foreign domestic helpers need to wait before receiving a job offer from Hong Kong.