Do minimum wages cause unemployment?

Yes, according to the standard model of the labour market, an introduction of a minimum wage above the market clearing wage rate will cause an excess of labour in the market. This model assumes conditions of perfect competition where firms make zero profit and are wage-takers."Standard model"However, the extent of unemployment depends on the elasticity of demand for labour, which determines how the rate at which the percentage change in labour falls following an increase in the wage rate.
The standard model can be criticised as we can see that labour markets in fact do not clear with an unemployment rate of around 4% in the UK.
An alternative model, in an industry with few firms, displaying characteristics similar to that of monopsonistic competition, where there is imperfect competition, allows firms to have some degree of wage-setting power. We may see little to no changes to employment following an introduction on the minimum wage. The model shows that firms will employ labour where the marginal revenue product = the marginal cost of labour i.e. the profit maximising level of employment. The model shows a fall in unemployment but less than the of the standard model."Monopsony graph"This model can be critised again, as firms may not be able to observe the marginal cost and marginal revenue products of their labourers so the model may not be an accurate representation of firms behaviour in monopsonistic competition.