PROBLEMS 1. Mexico has daily (rather than hourly) minimum wage laws. In 2016, th
ID: 2440184 • Letter: P
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PROBLEMS 1. Mexico has daily (rather than hourly) minimum wage laws. In 2016, the daily minimum wage in Mexico was about 73 pesos per day, and the exchange rate between Mexican pesos and U.S dollars was about 17 pesos per dollar. LO25.3 a. In 2016, what was the Mexican minimum daily wage in terms of dollars? b. Given that Mexican employees typically work 8-hour days about how much per hour is the Mexican minimum wage in terms of dollars? c. In 2016, the federal minimum wage in the United States was $7.25 per hour. How many times larger was the hourly S. federal minimum wage than the hourly Mexican U. minimum wage? d. If unskilled workers have a tendency to migrate to where they can obtain the highest compensation for their labor country is more likely to be receiving low-skilled which immigrants?Explanation / Answer
(a) $4.20
Since the exchange rate is 17 pesos per dollar, to find mexican currency in terms of US dollar, divide the amount of currency by the exchange rate. This gives: 73 pesos / 17 pesos per dollar = 4.20 dollar (pesos get cancelled out)
(b) $0.525
To convert the $4.20 a day minimum wage to an hourly rate, divide by the number of hours worked in a day. This gives: $4.20 / 8 = $0.525
(c) 13.8
The US federal minimum wage is 13.8 ($7.25 / $0.525) times greater than the hourly Mexican minimum wage.
(d) The US
Since, US has the higher wage, and workers tend to migrate to where they can obtain the highest compensation, the US will be receiving more low-skilled workers.
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