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Essay / Positive and Negative Effects of Minimum Wage - 2050
This includes inefficient distribution of sales among sellers, Krugman & Wells (2013) define it as “those who would be willing to sell the good at the lowest price are not not always those who actually manage to sell it.” It can also lead to wasted resources, including effort and time, such as stored products that need to be thrown away, workers spending hours looking for a job, or waiting in line to get a response to a job. Illegal activity may also arise from the minimum wage: if the minimum wage is much higher than the equilibrium wage rate, then workers who are desperate for employment may be willing to work below the minimum wage, thereby hiding their employment from the government. Additionally, this may result in low quantity inefficiency, since the minimum wage may cause the price of goods to increase for consumers, which in turn reduces the quantity of goods demanded. Finally, inefficient high quality may arise since suppliers who spend a lot to produce high quality may not be worth much to consumers who prefer a lower price, so suppliers and buyers will mutually benefit if the products are of lower quality and less expensive and therefore encourage inefficient quality (Krugman & Wells,