market is that both buyers and sellers in the market have complete information and are both recipients of the equilibrium price in the market, without any bargaining power. Under this assumption, the supply and demand sides will reach equilibrium price and quantity, and maximize efficiency. Any intervention in price and quantity will only make the market deviate from efficiency. In terms of the labor market, "labor demand" reflects the market value that an employer can obtain for each additional worker hired by an employer; "labor supply" reflects the compensation required for each additional unit of labor provided by a worker. Under the assumption of a perfectly competitive market, the supply and demand sides agree to reach an equilibrium wage.
The equilibrium wage is equal to the labor value and the compensation required by the laborer at the same time, and the labor and the employer are mutually beneficial. However, if the government arbitrarily sets a minimum wage that is higher than the market wage, even if workers are willing to provide more labor services, because the minimum wage is higher sms services than the labor value, employers cannot afford it, resulting in unemployment. Moreover, since the minimum wage usually affects only disadvantaged workers, neoclassical schools (such as the Chicago School represented by Milton Friedman) further infer that the minimum wage will cause disadvantaged workers to lose their jobs.
This inference based on the perfect competition model is widely circulated even in Taiwan today. For example, Guan Zhongmin, the current president of National Taiwan University, once declared in his appointment as the chairman of the National Development and Development Council, "(Increase the basic salary) Don't say a braised egg, a grain of rice can't be cooked." Gao City Labor Bureau provides subsidies for fall prevention measures Photo Credit: WebMD Does the boss have bargaining power? David Card and Alan Krueger's research not only provides a model for empirical research, but also questions the original efficient market assumption: If minimum wage increases have no negative impact on employment, or even help, then the labor market Not a perfectly competitive market.