If formula_35, then an increase in the minimum wage increases participation "and" the unemployment rate, with an ambiguous impact on employment. When the bargaining power of workers is less than formula_31, an increases in the minimum wage improves the welfare of the unemployed - this suggests that minimum wage hikes can improve labor market efficiency, at least up to the point when bargaining power equals formula_31. On the other hand, if formula_38, any increases in the minimum wage entails a decline in labor market participation and an increase in unemployment.