Answer to Question #251682 in Economics for saleemaslam

Question

The British Columbia government recently increased the minimum wage from $14.60 per hour to $15.20 per hour. The new minimum wage was implemented as of June 1, 2021. Drawing from what you have learnt on the topic “labour demand” and from related literature, what do you think might be the implications on employment and wages in the Province?

word limit: 120 words

Answer 1

With an increase in the minimum wage, the amount of supply in the labor market will increase, that is, more people will agree to work for a new wage, this is due to the fact that the amount of frictional unemployment decreases. And the supply will shrink as fewer and fewer firms will pay wages of this size, since the plans of businessmen when calculating the cost of their goods or services taking into account the initial level of the minimum wage.