In recent years, when people around the world talk about the minimum wage, one popular question always comes up in these discussions. Given this, how is the supply and demand of labor affected by the increase in the minimum wage and what consequences does this phenomenon entail? 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 first world countries and third world countries . defined as the minimum amount of money that an employee must be paid for his work, which varies from country to country. Minimum wages, also known as floor prices, are established in an “attempt to protect employees from exploitation and enable them to afford the basic necessities to live a comfortable life. Minimum prices can lead to a deadweight loss in the economy, which, in this case, means that the minimum wage could force companies to hire fewer employees, thus increasing unemployment” (Investopedia). That said, if the equilibrium wage, the wage rate that produces neither an excess supply of workers nor an excess demand for workers and the labor market, is higher than the minimum wage, then the minimum wage does not have much effect on the income. 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: with the new increase in the minimum wage, therefore, the demand for labor will be lower than the supply of workers, which means that there will be a surplus of workforce, resulting in unemployment. As a result, not all workers willing to work for that particular minimum wage……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 sit in class and listen to lectures when they can be out earning money. In summary, an increase in the minimum wage is only beneficial for skilled and well-educated workers. This is because unskilled or uneducated workers are the first to lose their jobs when there are budget cuts in a company because employers prefer to use labor saving methods to maintain their revenue. 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.