Suppose that the wage distribution for a small town is as, Ask an Expert

Economics

Suppose that the wage distribution for a small town is as given here

Sector Number of Workers Wage ($)

A 50 $10 per hour

B 25 $5 per hour

C 25 $5 per hour

Assume that a minimum wage law is passed. It has no effect on the high wage sector A, but boosts wages to $7 per hour in sector B, while reducing employment to 20. Displaced workers from sector B move into the uncovered sector, C, where wages fall to $4.50 per hour. Has wage inequality risen or fallen? Explain, using three different ways to measure inequality.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91835613

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