Where hiring is done by a monopsonist, a minimum wage can actually increase both the wage paid and the number of workers hired, as shown to the right. This result comes about because the minimum wage has the effect of forcing the firm to face horizontal labor supply and MFC curves. As a result, the relevant MFC can actually be lower than when it is upward sloping, inducing the firm to hire more workers.

    Increases in minimum wages tend to increase unemployment in competitive labor markets, but they may well increase employment in monopsonisitically controlled factor markets.

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