Is minimum wage legislation bad for on-the-job training?
It has been argued that the minimum wage prevents workers from investing in on-the-job training and discourages employers from providing specific training to low-income workers. Why would the minimum wage have an adverse effect on human capital accumulation for low-income workers?
See the attached file, where MRP is the marginal revenue product. This is the additional revenue generated by the employment of one additional input. MRP is found by dividing the change in total revenue by the change in the variable input or by multiplying marginal physical product by marginal revenue. Rather than stating productivity of an input in terms of the physical quantity of production, marginal revenue product states productivity in terms of the revenue generated.
Suppose, for example, that a worker contributes five ...