If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

a. an increase in the number of unskilled jobs available.
b. a decrease in the number of unskilled jobs available.
c. an increase in the number of businesses using unskilled workers.
d. a decrease in the number of workers wanting unskilled jobs.

1 answer

If the government sets a wage for unskilled labor above the market wage, we would expect a b. a decrease in the number of unskilled jobs available.

This is because a higher wage creates an incentive for more individuals to seek unskilled jobs, leading to an excess supply of labor; however, employers may not be willing to hire as many workers at the higher wage, potentially leading to a reduction in the number of jobs available. Additionally, higher labor costs might lead some businesses to reduce their workforce or even automate tasks that would otherwise be performed by unskilled labor.