In recent years, when people around the world talk about the minimum wage, a popular question always arises in these discussions. That being said, how are labor demand and supply affected by the increase in the minimum wage and what are the consequences felt by this phenomenon? This essay will explain how the minimum wage is defined, the concepts behind it, as well as its effect on the supply and demand curve, and why there is such a large gap between minimum wages in the countries of the first world and third world countries. defined as the minimum amount of money an employee must receive for their work, which varies by country. Minimum wages, also known as price floors, are established with the aim of “protecting employees from exploitation and enabling them to afford the basic necessities for a comfortable life.” Price floors can cause a loss of dead weight in the economy, which in this case means the minimum wage could force businesses to hire fewer employees, thereby increasing unemployment” (Investopedia). That said, if the equilibrium wage, the wage rate that produces neither an excess supply of workers nor excess demand for workers and the labor market, is higher than the minimum wage, then the minimum wage does not have a great effect on the labor market. market, since the equilibrium point will be above the minimum wage. On the contrary, if the equilibrium wage is lower than the minimum wage, there will be a surplus of labor: at the newly increased minimum wage rate, the demand for labor will therefore be lower than the supply of workers, which means that there will be a surplus of work, which leads to unemployment. Therefore, not all workers willing to work for that particular minimum wage rate will... middle of paper ... l. In short, minimum wage rates vary from country to country due to lack of education, either because students are forced to drop out of school to help their families financially or because students prefer to earn money rather than sitting in class and hearing lectures when they can be earning money outside. . - In summary, an increase in the minimum wage only benefits skilled and well-educated workers. This is because unskilled or poorly educated workers are the first to lose their jobs in the event of budget cuts in a company, as employers prefer to resort to labor-saving methods in order to maintain their income. With an increase in the minimum wage, there is a surplus in the supply of workers because everyone wants to work now that wages are higher, however, the demand for labor decreases, which in turn increases unemployment in a country..