This chapter examines the effect of wage levels at the low end of the labor market on employment. The focus is on low-end service jobs. These have been a major source of employment growth in many of the countries that have achieved rising employment rates during the past several decades. Because productivity in these jobs tends to be low and difficult to increase, the question is whether relatively high wages will substantially reduce employer demand for labor. Within the United States, this has been the key question at issue in the recurring debate over whether, and to what degree, the statutory minimum wage should be increased.
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