Question

If the minimum wage increased in the city limits of Louisville, but did not increase across the river in Indiana, what effect might that have in both markets? What effect will this have for individuals who live in Louisville? For those who live in Indiana?

Answer 1

PART A

(1) Increase in demand for employment in Louisville than in Indiana.

(2) Migration of workers from Indiana to Louisville.

(3) A higher standard of living in Louisville than in Indiana.

(4) High cost of doing business in Louisville than in Indiana.

PART B

(1) increase in population of workers in Louisville.

(2) Increase in inflation in Louisville

(3) High standard of living in Louisville.

PART C

(1) Migration of the workforce from Indiana

(2) Reduced population of workers in Indiana.

Explanation: Minimum wage is an Economic term used to describe the lowest amount of money below which no worker who is employed within an economy should be paid.This term is usually concerned with those employed in the formal sectors of the economy in both the Private and public sectors, it is usually legally approved.

THE HIGHER THE MINIMUM WAGE IN AN ECONOMY THE HIGHER THE RATE OF MIGRATION FROM OTHER ECONOMIES INTO THE ECONOMY.