b) The Monopsony Model

The Monopsony Model in economics examines the potential trade-offs of minimum wage policies on employment and poverty. This model suggests that in a market with only one or few employers (a monopsony), raising the minimum wage can potentially increase employment by equalizing the bargaining power between employers and workers. This hypothesis challenges the traditional view that increasing minimum wages necessarily leads to higher unemployment. The Monopsony Model provides a nuanced perspective on the effects of minimum wage policies and is particularly relevant in discussions about labor markets and income inequality.