minimum wage in labor economic

In the article ”The Minimum Wage and Product Differentials” Brodley S. Wimmer discusses the effects of a minimum wage increase on employment level, productivity,on different industries. Considering the effect of a minimum wage increase on employment level, Wimmer first noted that the real value of the minimum wage between 1966 and 1997 has decreased by 17%. The real value of the minimum wage represents the nominal minimum wage adjusted to the level of inflation. Therefore according to …

…as a greater portion of their inputs in made up of labor. For the fixed proportion factors industries, where there may be no substitution possibilities the effect on employment might be very little if any. It also depends on the short run and the long run, which effects employment. Minimum wage increase is good for the jobs where the demand for labor is inelastic and it’s disadvantageous for the jobs where demand in elastic.