Chapter Learning Objectives

  • Explain how raising the minimum wage affects a:
    (a) competitive labor market, with full coverage.
    (b) competitive labor market, with incomplete coverage.
    (c) monopolistic labor market.
  • Understand the principles of offsets, whereby employers attempt to undo the constraint resulting from the minimum wage.
  • Explain why raising the minimum wage may fail to reduce income inequality.
  • Understand the U.S. experience concerning changes in the minimum wage, following its introduction in 1938.