Question: In November of 2001 the government of BC introduced a “subminimum” wage of $6/hr. We talked about it in class, remember? The new subminimum applies only to individuals hired on or after Nov. 15, 2001 who had no paid work experience prior to that day. After workers accumulate 500 hours of paid work experience they are entitled to the regular minimum wage of $8/hr.

a. Identify an industry and occupation where workers are usually hired at the minimum wage. In the context of this labour market, identify who benefits from this policy change and who is hurt by it (“winners and losers”). Don’t forget about consumers. Illustrate your argument using supply and demand curves. Assume that workers who are subject to the subminimum wage are perfect substitutes for those who are not.

b. What if they are not perfect substitutes?