The average wage in the minimum wage policy is slightly higher than the one without it. Although the positive relationship between wage and effort is the same when a minimum wage is imposed as when it isn’t, the intervention has a negative effect on effort provision (productivity). In the case of no unemployment, minimum wages decrease effort level, and then productivity when comparing to the same wage without imposing minimum wage. One of the reasons is that minimum wages increase the "reference wage". As the minimum wage shortens the range, a wage equal to minimum level or slightly above minimum level is as unkind as possible in minimum treatment. Thus, the higher wage is needed to induce the same effort level. In addition, as informed above,
