Question

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Can Minimum Wage Policy cause unemployment or job losses.

Answer 1

Yes, minimum wage law can do cause sometime unemployment or job loss. Minimum wage law is a law which states the minimum wage that must be paid to an employee. Now, if the minimum wage more than the wage previously given by the firm owner to his employee, then he will cut down the number of employees in his firm to cut down its cost and maintain profit. Moreover firms will not hire any more employee is the minimum wage is more than its willing to pay, and hence unemployment will rise in economy.