Related to Solved Problem 5 Use the information in the follo

[Related to Solved Problem

#5]

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

Year

Minimum wage

(dollars per hour)

CPI

Minimum wage

(euros per hour)

CPI

1957

$1.00

27

0.19 euros

8

2014

$7.25

237

9.61 euros

106

Sources: John M.Abowd, Francis Kramarz, Thomas Lemieux,and David N. Margolis, \"Minimum Wages and Youth Employment in France and theUnitedStates,\" 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).

Solution

Answer to the blank: 17.30%

Explanation:

In U.S.

Real wage in 1957 = (1 / 27) * 100 = $3.70

Real wage in 2014 = (7.25 / 237) * 100 = 3.06

% change in real minimum wage = [(3.70 - 3.06) / 3.70] * 100

= 17.30%