i

ABSTRACT
The main objective of introducing minimum wage is elimination of extreme poverty. It encourages
low skilled workers and ensure that they will be paid a guaranteed minimum. However, some
economists argue that it increases unemployment as employers are discouraged to hire new
employees. This paper discusses the pros and cons of offering a guaranteed minimum wage. It
doesnt suggest whether or not minimum wage should exist but contributes to the understanding
of effects of minimum wage. To keep it focused, only US economy is considered to study the
effects.










ii


TABLE OF CONTENTS
(i) Abstract.. (i)
(ii) Table of contents (ii)
(iii) Acknowledgemets.. (iii)
1. Introduction. 1
1.1. Minimum wage 1
2. Economists View..2
2.1. Elasticity of demand for labor...3
2.2. Arguments against minimum age laws.4
2.3. Facts from Research about US economy..4
3. References 9







iii


ACKNOWLEDGEMENTS
I offer my sincere appreciation for the learning opportunities provided by my Prof. Evelina
Mengova.