Saturday, April 26, 2014

[bfuecqyn] Minimum wage and consumer prices

Upon raising the minimum wage, some firms will pass on some of the increased labor costs to consumers.  How much of the cost (what is the elasticity)?  Which firms/industries?

I wildly speculate that firms that tend to employ workers at minimum wage tend to have consumers at that level, too, negating the effect of the minimum wage increase.

After taking into account this (and other) inflationary effects, what will be the net redistribution of real income?

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