6 W E B N M 10. [Related to Solved Problem 85 Use the information in the followi

Question

6 W E B N M 10. [Related to Solved Problem 85 Use the information in the following table to determine the percentage changes in the U.S. and French real minimum wages between 1957 and 2014. United States France Minimum wage (dollars per hour) $1,00 $7.25 Minimum wage (euros per hour) 0.19 euros 9.61 euros CPI CP Year 1957 2014 237 106 Sources: John M.Abowd, Francis Kramarz, Thomas Lemieux,and David N. Margolis, "Minimum Wages and Youth Employment in France and theUnited States," in D. Blanchflower and R. Freeman, eds., Youth Employment and Joblessness in Advanced Countries, Chicago:University of Chicago Press, 1999, pp. 427-472 (the value for the minimum wage is given in francs; it was converted to euros at a conversion rate of 1 euro 6.55957 francs); Insee online data bank.www.insee.fr U.S Department of Labor; and U.S.Bureau of Labor Statistics. Calculate the percentage change in U.S. real minimum wages between 1957 and 2014: %, (Enter your response as a percentage rounded to two decimal places) Calculate the percentage change in French real minimum wages between 1957 and 2014: %. (Enter your response as a percentage rounded to two decimal Based on the above calculations, we can conclude that 0 A. real minmurm wages have increased faster in the US, than they have in France during this period B. although nominal minimum wages increased in the U.S, real minimum wages fell during this O c. although nominal minimum wages fell in the U.S., real minimum wages increased during this period French workers are better educated, hence they would always command a higher wage rate. O D.

Explanation / Answer

Real Wage= Nominal wage/CPI

Option B is correct i.e. although nominal wages increased in the U.S., real minimum wages fell.

Year U.S France 1957 0.0370 (1/27) 0.02375 (0.19/8) 2014 0.0306(7.25/237) 0.09066 (9.61/106) % change - 17,29% 281.72%

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