tag:blogger.com,1999:blog-17206839.post8131835948876507832..comments2023-09-09T09:26:22.175-04:00Comments on Andrew Samwick's Blog: Why Not Both the Minimum Wage and the EITC?Andrewhttp://www.blogger.com/profile/13514024573333057559noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-17206839.post-38529903776231281152006-08-01T19:35:00.000-04:002006-08-01T19:35:00.000-04:00On the other side, I have been persuaded that the ...<i>On the other side, I have been persuaded that the negative employment effects of the minimum wage are important.</i><br><br>Andrew, everything I've read about the debate over the employment effects of the minimum wage indicates that these days it's reduced to a debate between those who say there is no employment effect and those who say there is a very small negative effect. The final exchange between Card & Krueger, on one hand, and Neumark and Wascher, on the other, in the December 2000 AER was pretty much a slam dunk for Card & Krueger. Neumark seems to have pretty much abandoned this issue to study other secondary and tertiary effects of the minimum wage. Even staunch libertarians like Steven Landsburg and Tyler Cowen now acknowledge that minimum wage increases have very little employment effect, although neither one seems able to bring himself to take the logical next step and abandon his opposition to minimum wages.<br><br><i>If you thought that the labor market was characterized by monopoly power in hiring</i><br><br>I'm often reminded these days of something that Ben Klein, one of my profs in the Ph.D. program at UCLA, said: "Every business has at least a little bit of market power." While he was talking about product markets, the point could also be well applied to labor markets--an employer, even in the absence of collusion or a company town, will almost certainly have more bargaining power than a low-wage worker. Hence a price-taking model of the labor market would not apply, and it is only in a price-taking model that you get the unambiguous prediction that a minimum wage reduces employment.MarkWhttp://www.blogger.com/profile/03557019928202865795noreply@blogger.comtag:blogger.com,1999:blog-17206839.post-44425522271499985102006-08-01T21:45:00.000-04:002006-08-01T21:45:00.000-04:00EITC is good for major urban areas in the U.S., mi...EITC is good for major urban areas in the U.S., minimum wage increase is good for the rest.Arun Khannahttp://www.blogger.com/profile/00283104336139330439noreply@blogger.comtag:blogger.com,1999:blog-17206839.post-87519576645852442102006-08-01T23:14:00.000-04:002006-08-01T23:14:00.000-04:00Markw: the direct employment effects (poor people...Markw: the direct employment effects (poor people losing their jobs) are pretty clearly too small to measure accurately in a statistically noisy economy. But the indirect effects seem very troublesome; high minimum wages seem to keep unskilled or low-skilled workers from getting a foot on the "employment ladder" that leads from a job stocking shelves at Odd Lot into more lucrative positions. The evidence is not perfect, but it is compelling, particularly since the minimum wage requires us to spend a huge amount on non-poor families to target a few poor ones.<br><br>My rejoinder to the big box question is simply that most big boxers aren't all that affected by this; the average wage at Wal-Mart is well above where the new minimum would be set. Even if there are some competitive effects, they would have to be pretty large to pass through increases to people making an average of roughly $8.00 an hour, particularly since many Wal-Mart's are in areas where they are the best employer on many dimensions. It's very hard for me to see McDonalds as a monopsony employer.Samanthahttp://www.blogger.com/profile/14123602399636336853noreply@blogger.comtag:blogger.com,1999:blog-17206839.post-62220428939292366392006-08-02T14:12:00.000-04:002006-08-02T14:12:00.000-04:00high minimum wages seem to keep unskilled or low-s...<i>high minimum wages seem to keep unskilled or low-skilled workers from getting a foot on the "employment ladder" </i><br><br>The real minimum wage has been falling for ten years as the teen labor participation has fallen. It is low level of the pay that keeps them out. <br><br><i>since the minimum wage requires us to spend a huge amount on non-poor families to target a few poor ones</i><br><br>What?! The minimum wage can now overturn economics and force businesses to pay their employees more then they are worth? Far from it. It can only force some richer customers to pay for the real costs of providing services to them rather than dumping them on the public.Lordnoreply@blogger.com