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Product details
File Size: 22799 KB
Print Length: 446 pages
Publisher: Princeton University Press; Revised ed. edition (December 22, 2015)
Publication Date: December 22, 2015
Sold by: Amazon Digital Services LLC
Language: English
ASIN: B017I2M9BK
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Very compelling argument disputing that an increase in minimum wage causes job losses. i.e. as the cost goes up demand goes down. Well done.
A must read for those supporting a minimum wageE. Ray Canterbery
"Myth and Measurement: The New Economics of the Minimum Wage" is a comprehensive examination of the theoretical foundation and empirical evidence of minimum wage policy. The book consists of: New cross-sectional research, an examination of past research, further analysis of distributional issues, and a new theory of the minimum wage. The book overwhelming uses regression analysis to statistically support the author's positions.Conventional neoclassical theory posits an increase in the minimum wage will increase the cost of labor, cause a deadweightloss, and increase unemployment. A few workers will benefit. Everyone else will be worse off. The best policy, using the neoclassical model, is to let the market naturally adjust wages.Card and Krueger present several new studies that directly refute the notion that minimum wage laws must distort markets. They analyze past studies and find many statistical errors and shocking gaffes. When the authors correct for statistical errors, like autocorrelation and small sample sizes, past papers become statistically insignificant or show a positive impact on employment.Low wage employers act as monopolistically competitive firms. They have market power over the wages they pay to employees. Moderate increases in the minimum wage lead to increasing real wages AND a marginal increase in employment. The minimum wage should no longer be looked at as a positive issue (i.e. efficiency.)Minimum wage laws are a blunt redistributive policy. They marginally help low wage workers and the poor. Minimum wage laws are a poor substitute for more progressive welfare programs.
A common problem in economics "research" is that authors let their agenda trump experimental design. For example, in the fast-food case study, the authors made the claim that "full time equivalent" (FTE) employees rose in NJ after the minimum wage increase. A trusting reader (myself included, initially) would say "great! There was actually an increase in employment!". However, we need to look a little more closely at what they did.Most people without an agenda would define FTE as (total payroll hours)/40; i.e., if employees worked 40 hours per week, how many employees would there be. In this study, however, they defined a part-time employee - whether that person worked 1 hour or 30 hours - as 1/2 FTE. 10 employees, each working 1 hour per week (total 10 work-hours) would be counted as FIVE full-time-equivalent employees. The effect on a part-time worker whose weekly hours dropped from 30 to 3 would not be captured by this measure. There's no GOOD reason to define a FTE in this manner, and plenty of good and obvious reasons NOT to. The fact that the authors chose this contorted definition suggests that they were looking for a variable that would give them the result that conformed with their agenda, rather than an honest analysis.
A common problem in economics "research" is that authors let their agenda trump experimental design. For example, in the fast-food case study, the authors made the claim that "full time equivalent" (FTE) employees rose in NJ after the minimum wage increase. A trusting reader (myself included, initially) would say "great! There was actually an increase in employment!". However, we need to look a little more closely at what they did.Most people without an agenda would define FTE as (total payroll hours)/40; i.e., if employees worked 40 hours per week, how many employees would there be. In this study, however, they defined a part-time employee - whether that person worked 1 hour or 30 hours - as 1/2 FTE. 10 employees, each working 1 hour per week (total 10 work-hours) would be counted as FIVE full-time-equivalent employees. The effect on a part-time worker whose weekly hours dropped from 30 to 3 would not be captured by this measure. There's no GOOD reason to define a FTE in this manner, and plenty of good and obvious reasons NOT to. The fact that the authors chose this contorted definition suggests that they were looking for a variable that would give them the result that conformed with their agenda, rather than an honest analysis.
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