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Economists agree: Raising the minimum wage reduces poverty

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Re: Economists agree: Raising the minimum wage reduces poverty

#51

Post by jjoonathan »

jbellis wrote: post #22

It's pretty easy to find research coming to a different conclusion than the Card/Kreuger paper that most pro-minimum-wage-increase people cite: http://gregmankiw.blogspot.com/2006/06/sperling-on-minimum-w... http://cafehayek.com/2009/09/new-study-casts-doubt-on-card-k... http://rjwaldmann.blogspot.com/2009/12/in-which-i-disagree-w... But the best reasoning I've seen on the subject is Bryan Caplan's: "Suppose you have…

It's not hard to argue with the "more existing evidence than meets the eye" either:

http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/200...

Three things to observe from the graph on page 31 (adobe reader page 33):

* There is publication bias in favor of the hypothesis that minimum wage increases decrease employment.

* If one takes the liberty of selecting only a handful of studies to argue with, one can find "strong" support for either side of this argument.

* Neither the "true mean" (mean at large y) nor the "biased mean" (mean at small y) of the studies lies anywhere near the break-even point (x value of -1) where the proposal of raising the minimum wage begins to hurt poor people in aggregate (i.e. the sum total of money flowing to poor people is less than it was before the raise).

Also, observe that the graph on page 33 (adobe reader page 35) suggests a trend in elasticity over time which has a plausible argument to back it up. Signed elasticity should increase (minimum wage increases become more beneficial) when labor is overabundant. In this case, labor tends to be sold nearer to the minimum price laborers will sell at and further from the price at which employers will stop purchasing so that a minimum wage increase results in more "win" scenarios (wages are increased without being pushed over the "cliff" that results in negative productivity) than "loss" scenarios (where wages are pushed over the cliff). This is consistent with the narrative of American employees losing leverage over time.

If both the narrative and its theoretical+observed impact on elasticity are true, minimum wage increases are becoming more beneficial over time.

Re: Economists agree: Raising the minimum wage reduces poverty

#52

Post by bjornsing »

jbellis wrote: post #22

It's pretty easy to find research coming to a different conclusion than the Card/Kreuger paper that most pro-minimum-wage-increase people cite: http://gregmankiw.blogspot.com/2006/06/sperling-on-minimum-w... http://cafehayek.com/2009/09/new-study-casts-doubt-on-card-k... http://rjwaldmann.blogspot.com/2009/12/in-which-i-disagree-w... But the best reasoning I've seen on the subject is Bryan Caplan's: "Suppose you have…

On paper there's a solution to this problem: Negative income tax [1]. Would be interesting to see it implemented somewhere...

1. http://en.wikipedia.org/wiki/Negative_income_tax

Re: Economists agree: Raising the minimum wage reduces poverty

#53

Post by rayiner »

jedmeyers wrote: post #37
krakensden wrote: post #18

Earlier quoted context omitted.

Just because things don't work asymptotically doesn't mean they don't work.

But why would a $15/hour minimum wage work and $100/hour won't? Where between 15 and 100 do you draw the line and why?

Why raise the thermostat setting from 40F to 65F? Why wouldn't 100F be better? Where between 65F and 100F do you draw the line and why?

Re: Economists agree: Raising the minimum wage reduces poverty

#54

Post by jruthers »

harryh wrote: post #48
jruthers wrote: post #46

Earlier quoted context omitted.

m not sure if you'll classify it as "credible" but the wikipedia article on HPI shows a clear ranking of countries that roughly correlates to the minimum wage (higher the wage, lower the poverty ranking). Which.. Doesn't seem like rocket science. http://en.wikipedia.org/wiki/Human_Poverty_Index http://en.wikipedia.org/wiki/List_of_minimum_wages_by_countr...

Well, maybe. Or perhaps countries with less poverty are able to support higher minimum wages? http://xkcd.com/552/

And how did the process start? The poverty situation in the better off countries didn't start improving because of magical fairy dust.

One end pushes the other end, sure, but you've got to start it somewhere.

People and politicians took action and improved laws, businesses still kept going and the cycle repeats upwards.

I don't see that happening in the US. I don't mind if the change isn't minimum wage (not going to happen in America), but at least do /something/ positive.

Re: Economists agree: Raising the minimum wage reduces poverty

#55

Post by thaumasiotes »

bjornsing wrote: post #52
jbellis wrote: post #22

It's pretty easy to find research coming to a different conclusion than the Card/Kreuger paper that most pro-minimum-wage-increase people cite: http://gregmankiw.blogspot.com/2006/06/sperling-on-minimum-w... http://cafehayek.com/2009/09/new-study-casts-doubt-on-card-k... http://rjwaldmann.blogspot.com/2009/12/in-which-i-disagree-w... But the best reasoning I've seen on the subject is Bryan Caplan's: "Suppose you have…

On paper there's a solution to this problem: Negative income tax [1]. Would be interesting to see it implemented somewhere... 1. http://en.wikipedia.org/wiki/Negative_income_tax

What's the Earned Income Tax Credit if not a negative income tax?

Re: Economists agree: Raising the minimum wage reduces poverty

#56

Post by harryh »

jruthers wrote: post #54
harryh wrote: post #48

Earlier quoted context omitted.

Well, maybe. Or perhaps countries with less poverty are able to support higher minimum wages? http://xkcd.com/552/

And how did the process start? The poverty situation in the better off countries didn't start improving because of magical fairy dust. One end pushes the other end, sure, but you've got to start it somewhere. People and politicians took action and improved laws, businesses still kept going and the cycle repeats upwards. I don't see that happening in the US. I don't mind if the change isn't minimum wage (not going to…

Something must be done? By people & politicians? This is the best way to fight poverty?

I agree that it isn't "magical fairy dust" that increases wages. What do you think it generally is?

Re: Economists agree: Raising the minimum wage reduces poverty

#57

Post by xixi77 »

And how exactly does "there is a paper that claims X" translate into "Economists agree that X is true"?

Well, it doesn't. In fact, I would generally be skeptical about any claim that starts with "Economists agree...", such is the nature of the profession.

Also, if we actually admit the effect on poverty to be true, the most obvious way to reconcile this is that newly-unemployed (and hence poor) workers move to places with lower minimum wage, where they can find work. Fewer poor people => less poverty.

Re: Economists agree: Raising the minimum wage reduces poverty

#58

Post by cstejerean »

rayiner wrote: post #53
jedmeyers wrote: post #37

Earlier quoted context omitted.

But why would a $15/hour minimum wage work and $100/hour won't? Where between 15 and 100 do you draw the line and why?

Why raise the thermostat setting from 40F to 65F? Why wouldn't 100F be better? Where between 65F and 100F do you draw the line and why?

I draw the line at about 74. When it starts to get into 75+ it gets uncomfortable for me personally. So instead of being dismissive I think it's actually worth thinking about the question. If $15 could work as a minimum wage, and $100 would clearly not work, where in that range does the transition happen. Or maybe $15 is already too high, but $12 could work. I certainly don't know the answer, but it's an interesting thing to ponder.

Re: Economists agree: Raising the minimum wage reduces poverty

#60

Post by xixi77 »

cjo wrote: post #36
jbellis wrote: post #22

It's pretty easy to find research coming to a different conclusion than the Card/Kreuger paper that most pro-minimum-wage-increase people cite: http://gregmankiw.blogspot.com/2006/06/sperling-on-minimum-w... http://cafehayek.com/2009/09/new-study-casts-doubt-on-card-k... http://rjwaldmann.blogspot.com/2009/12/in-which-i-disagree-w... But the best reasoning I've seen on the subject is Bryan Caplan's: "Suppose you have…

Even if minimum wage does cause some unemployment that's not the beginning or the end of the story. It's a market distortion created to counteract two other market distortions - namely already existing unemployment and market concentration on the employers' side, both of which depress wages. So even proving beyond a doubt that minimum wage causes an increase in unemployment isn't enough to abolish the institution if…

I am actually a little confused, why do you consider unemployment a market distortion, and how does the minimum wage helps to correct it?
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