Question

Joe sabia, an assistant professor of public policy at american university in washington, dc, says that a 10 percent increase in the minimum wage reduces retail employment by 1 percent and reduces employment among young workers by 3.4 percent. if president obama is successful increasing the minimum wage by 30 percent as explained in "obama wants $9.50 minimum wage," we can expect

Answer 1

Answer: labor supply will respond negatively.

If President Obama will be successful in increasing the minimum wage by 30 percent ($9.50 minimum wage)," we can expect that labor supply will respond negatively. As said, wage increase will reduce retail employment for firms will hire fewer workers or workers will be permitted only to work for a few hours. Employment among young workers will also be reduced.