Are both statements consistent with the model of price floor

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Question: Nobel Prize winner Gary Becker and Judge Richard Posner11 suggested that "unions strongly favor the minimum wage because it reduces competition from low-wage workers (who, partly because most of them work part time, tend not to be unionized) and thus enhances unions' bargaining power." They further argued that "although some workers benefit-those who were paid the old minimum wage but are worth the new higher one to the employers-others are pushed into unemployment, the underground economy or crime. The losers are therefore likely to lose more than the gainers gain; they are also likely to be poorer people." Are both of these statements consistent with the model of price floors discussed in this chapter? Why or why not?

Reference no: EM131482863

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