Minimum Wages in Monopsonistic Labor Markets

It's common knowledge that minimum wages create unemployment. But in this lesson you'll learn that when a minimum wage is imposed in a market in which a dominant employer sets the market wage rate, more workers may end up being employed at higher wages.

[Explorer]

Thank you! Labor econ course kicking my butt and this is a great help!

[headlessprofessor]

This is very clear as far as it goes, but it leaves several questions. 1) can a national minimum wage applied to all regions, all industries, get just the right increase that will not increase unemployment overall? 2) When a firm is monopsonistic in the labor market, but competitive in its product markets, does it raise prices to recover the lost profits due to minimum wage increases?

[shafiqullahyousafzai]

Thanks from Afghanistan for such interesting explanation

[rohannaik]

+jason Welker What about in oligopsonistic labor market would the same effect be seen

[aneeskhan]

Sir how can i be thank full to you . Plz Comment. Your explanation i just would like to mention just wow!

[chrissyification]

wow this is really well explained. thanks for the help :)

[timothyhufker]

Doesn’t The MRC slope>the SL slope imply that wages are negotiated on a collective basis. Doesn’t the heterogenous nature of labor as a commodity entail that wages are negotiated on an individual basis, and therefore the increase in wages required to attract workers who are less willingness to sell independent of the wages for workers who are more willing to sell?

Labor markets aren’t like say gas, where price is based on the collective willingness to buy of all buyers. Each persons labor is distinct, and so the price of each persons labor is distinct.

Practically speaking why would a potential seller be influenced by the wages of other sellers, so long as their own wage is independent. The employer then has no incentive to raise wages for anyone who has already accepted a given wage? If this is in fact the case then why is the MRC slope>the SL slope?