Congratulations! You have just been appointed the special advisor to the prime minister for employment-related issues. Fortunately, your portfolio does not involve analyzing all of the facets of labour markets, but rather two specific policy measures: the payroll tax and the minimum wage regulation.
• Payroll taxes have risen rapidly in Canada over the past decade, and some analysts claim that this has a detrimental effect on employment. The payroll tax has been labelled by some as a "job killer." Explain how you would go about analyzing this proposition. Because you are a trained economist, you can go beyond the scope of the rhetorical anecdotes and unsubstantiated, ideological accusations, and apply supply-and-demand analysis to this issue. Your response should include a graph with an explanation, and an identification of the variables that determine the extent of the alleged disemployment effect.
• It is alleged by some that minimum wage laws have a potentially adverse effect on employment. I valid, this assertion would definitely weaken the ability of minimum wage laws to help the disadvantaged. It is time to play point-counterpoint. First, put on your neo-classical economist hat and argue a case against the minimum wage. What are the economic effects? Is it an effective policy measure? Because you are a trained economist, you can apply substantive economic analysis using labour demand theory. Next, put on your more interventionist hat, and argue that the minimum wage does not have significant disemployment effects. In particular, you might mention the case of implementing a minimum wage in a monopsony, or the case of an employer with a high degree of market power. Finally, put on your empirical researcher hat. We know that there are theoretical reasons to expect at least some disemployment effect, but how important are these effects in the real world? Without discussing the technical details, discuss the essence of the findings of the empirical research. You should provide a bit more depth than a simple yes/no answer.

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The Answer of Congratulations! You have just been appointed the special advisor to the prime minister for employment-related issues. Fortunately, your portfolio does not involve analyzing all of the facets of labour markets, but rather two specific policy measures: the payroll tax and the minimum wage regulation.
• Payroll taxes have risen rapidly in Canada over the past decade, and some analysts claim that this has a detrimental effect on employment. The payroll tax has been labelled by some as a "job killer." Explain how you would go about analyzing this proposition. Because you are a trained economist, you can go beyond the scope of the rhetorical anecdotes and unsubstantiated, ideological accusations, and apply supply-and-demand analysis to this issue. Your response should include a graph with an explanation, and an identification of the variables that determine the extent of the alleged disemployment effect.
• It is alleged by some that minimum wage laws have a potentially adverse effect on employment. I valid, this assertion would definitely weaken the ability of minimum wage laws to help the disadvantaged. It is time to play point-counterpoint. First, put on your neo-classical economist hat and argue a case against the minimum wage. What are the economic effects? Is it an effective policy measure? Because you are a trained economist, you can apply substantive economic analysis using labour demand theory. Next, put on your more interventionist hat, and argue that the minimum wage does not have significant disemployment effects. In particular, you might mention the case of implementing a minimum wage in a monopsony, or the case of an employer with a high degree of market power. Finally, put on your empirical researcher hat. We know that there are theoretical reasons to expect at least some disemployment effect, but how important are these effects in the real world? Without discussing the technical details, discuss the essence of the findings of the empirical research. You should provide a bit more depth than a simple yes/no answer.

Congratulations! You Have Just Been Appointed the Special Advisor to the Prime