Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince

Exercise 6

In a recent speech, the governor of your state announced: "One of the biggest causes of juvenile delinquency in this state is the high rate of unemployment among 16 to 19 year olds. The low wages offered by employers in the state have given fewer teenagers the incentive to find summer employment. Instead of working all summer, the way we used to, today's teenagers slack off and cause trouble. To address this problem, I propose to raise the state's minimum wage by $ 1.50 per hour. This will give teens the proper incentive to go out and find meaningful employment when they are not in school." Evaluate the governor's plan to reduce juvenile delinquency.