Final answer:
An increase in minimum wage could lead to increased structural unemployment for low-skill labor but may have nuanced effects on the economy, including possible offsets from increased worker spending. Option number C is correct.
Step-by-step explanation:
An increase in the minimum wage may have different effects on employment depending on various factors.
Some economists argue that an increase in the minimum wage could reduce employment for low-skill labor, which may result in an increase in structural unemployment since the skills of the workers do not match the needs of the employers.
A 10% increase in the minimum wage could potentially decrease the hiring of unskilled workers by 1 to 2%, as suggested by some studies. These changes may primarily affect those with less experience or those seeking low-skilled positions, possibly increasing employment barriers and reducing the opportunity for on-the-job training and experience gains.
Furthermore, minimum wage increases can also lead to increased spending by workers, which might increase demand for goods and services, potentially offsetting any negative impact on employment. There are complex factors at play, including how increased labor costs affect the supply curve and whether these costs are passed on as price increases to the consumer.