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One major poverty alleviation policy has been an increase in the minimum wage to $15. Will...

One major poverty alleviation policy has been an increase in the minimum wage to $15. Will the misemployment effects of the minimum wage be larger if the labor demand is elastic or inelastic?

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The disemployment effects of minimum wage be larger if the labour the labor demand is elastic. Elasticity of demand of a product or service is the responsiveness of demand of that product or service to a change in its price or cost. In our case, assuming that there is an increase in the minimum wage which means an increase in cost of labor for the firms, there is a possibility of lay-off of labor to offset the increase in labor cost. Thus, disemployment effects of minimum wage will be larger if labor demand is elastic.

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