[PEN-L:30348] Re: raising min wage

[Gil Skillman <gskillman@xxxxxxxxxxxxxxxxx>]

Mat, for some sources, check out:

Zavodny, Madeline, "Why Minimum Wage Hikes May Not Reduce Employment,"
     _Economic Review_, Federal Reserve Bank of Atlanta, 1998, 83(2), pp.
18-28.
Card and Krueger, _Myth and Measurement_ 1995  (reporting empirical studies
in which they find that raising state-level min. wage levels was associated
with *reduced* unemployment, but you should also check out the followup
literature on this book.)
Rebitzer, James B; Taylor, Lowell J. The Consequences of Minimum Wage Laws:
Some New Theoretical Ideas..
[Journal Article] Journal of Public Economics. Vol. 56 (2). p 245-55.
February 1995.

Basic argument:  The claim that raising the minimum wage tends to reduce
unemployment only obtains generically as a theoretical matter under
perfectly competitive market conditions.  Given either monopsony power or
efficiency wage-type conditions in the labor market--for which there is
evidence--raising the minimum wage need not increase unemployment or
inefficiency, and in fact may reduce it.  Finally, just as a footnote to
this argument, I have a paper showing that raising the minimum wage may
raise the number of *people* employed (and reducing hours worked per
person) in the (typical) presence of quasi-fixed costs.  If you're
interested I'll forward it to you directly.

Gil






> I'm trying to collect a list of arguments for raising the minimum wage,
> especially those that apply in 'developing' nation contexts.  Fairness,
> equity, social justice arguments and/or efficiency/economic/macro
> arguments are all fine.  Do people know of any good articles, books,
> websites that catalogue these arguments?  Also, I'd be interested in any
> newer or less well known arguments people may have. (send on or off
> list--I'll collect the ones I get off list and submit them at the end).
> Also I'd be interested in counter-arguments to the usual arguments
> against raising minimum wages. Thanks, Mat