To the extent that a higher wage causes labor to become less productive, the demand for labor decreases, thus offsetting the unemployment effects caused by the minimum wage.

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Quizplus · Accepted Answer

Higher wages do not inherently cause labor to become less productive; productivity is influenced by many factors including technology, training, and work environment. The demand for labor may decrease if employers cannot afford the higher wages or if they substitute labor with automation, but this is not directly due to decreased productivity from higher wages.

To the Extent That a Higher Wage Causes Labor to Become