So if a new employee is worth $7/hour in profit (before his salary), when the minimum wage is $7.25 he won't be hired; when it's $6.75 he will be. So in your model, reducing the minimum wage will increase employment.
A fast-food restaurant deciding whether to close earlier will compare the cost of staying open for the last hour with the income. If costs decrease, it is more likely to remain open, thereby providing employees another hour of work.
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Re: When does Krugman get to be president like Bartlet?
Date: 2009-12-17 05:17 pm (UTC)A fast-food restaurant deciding whether to close earlier will compare the cost of staying open for the last hour with the income. If costs decrease, it is more likely to remain open, thereby providing employees another hour of work.