Question

If the federal minimum wage is​ abolished, the labor force participation rate​ ____________. A. will increase....

If the federal minimum wage is​ abolished, the labor force participation rate​ ____________. A. will increase. B. will not change. C. will decrease. D. may​ increase, decrease, or not change.

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Answer #1

The Minimum wage law is an act passed by the Federal government and according to this act, every employer needs to pay the wages above or equal to the minimum wage determined by the Federal Government. If the federal minimum wage is abolished, the labor force participation rate will decrease.

This is because in the absence of the minimum wage the employers will have an incentive pay the wages below the market equilibrium wage for maximising their profits. So some labor will not be willing to work at wages below the market equilibrium wages.Hence the labor force participation rate will decrease

The participation rate can be defined as the total number of people or individuals who are currently employed or they are looking for the work.

Hence option C is the correct answer.

Option C; will decrease.

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