Written Response Questions
Article 1: Effects of raising the minimum
wage: Research and key lessons
Review: This article does a good job or providing a
broad overview of the existing research on the minimum wage. I also think it is
a fair summary and provides evidence from both those who support and those that
are against the raising the minimum wage.
1:Draw a series of graphs for the labor market for
low wage (minimum wage) workers. You should draw three graphs. In the first,
there is no minimum wage (no regulation). In the second, include a minimum wage
of $7.50 and in the third graph include a minimum wage of $10.00 per hour. On
each graph label the supply/demand graphs, producer and consumer surplus and
Your graphs should look similar in structure/presentation to Exhibit
10.10 (except there is no tax in this question).
2The analysis we traditionally do in Econ 101
involves fixing one variable and holding the remaining variables constant. We
do not consider secondary impacts or how economic agents react to the change we
are considering. Based on the information in the article, what additional
impacts does raising the minimum wage have beside those shown in Question 1?
3: The article spends some time discussing a study
by Card and Krueger. How would you classify their study? Is the situation they
investigate a natural experiment? Do you think their results are suggestive of
causation or are merely picking up a correlation? Support your statements with
information from the article.
You may want to consider what you wrote in Question 2 about additional
impacts and whether the design for the Card and Krueger study controls for
these in their âtreatmentâ and control groups.
4: If firms that employed minimum wage workers
operated under perfect competition, how would we expect the introduction of a
minimum wage to impact their industry? Based on the information in the article,
do you think the firm/companies that employ minimum wage workers operate under
perfect competition? Support your answer with details from the article.
You may want to consider the features of competitive markets
discussed in Chapter 4 and Chapter 7 and the other market structures discussed
in Chapters 12 and 14.
Article 2. Robots Seem to Be Improving Productivity,
Not Costing Jobs
Review: This article discusses the impact robots
have had on labor productivity. The questions focus on topics covered in
Chapter 6 and Chapter 11.
1:Assume that the market for automobiles is at the
perfectly competitive equilibrium. How would the introduction of robots in the
manufacturing process impact the equilibrium? Justify your assumed impacted
based on information included in the article.
Your answer should include a pair of graphs similar to Exhibits 6.16
and Exhibit 6.17.
You may also want to consider Exhibit 6.14 when forming your answer.
2: Based on the content of the article, do robots
appear to be a âlabor-saving technologyâ or a âlabor-complementary technologyâ
and is this the result that you expected. Use the authorsâ results and/or
statistics to support your answer.
3: Based on your answer to Question 2, how would
the labor market be impacted by robots? For simplicity assume we are discussing
the labor market for automobile workers.
See Section 11.2.
4: Do you think that robots increased or decreased
wage inequality? Support your answer with information from the article. Your
answer should mention how robots potentially impact the VMPL.
Consider the factors that drive wage inequality listed in 11.3.
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