More Murphy Meandering (through) Minimum Wage Literature
At EconLib. Here’s something that might surprise you, but you need the background info that when Krugman told the NYT readers that there is “just no evidence” that minimum wage hikes reduce employment, he linked to a 2010 paper by Dube et al. So with that:
If we are discussing proposals to increase the minimum wage to $10.10, then Dube et al. are telling us that they are 95-percent confident that teenage employment will fall by no more than about 6 percent.11 If, instead, we consider the more aggressive proposals to raise the minimum wage to $15 per hour, then Dube et al.’s results assure us with 95-percent confidence that the hit to teenage employment will be no worse than about 16 percent. (!) These outcomes are hardly negligible, and they are fencing in a spectrum of bad outcomes, not just an isolated (and improbable) disaster. In other words, when we translate the quotation from above into plain English, we are not saying that there is just a small probability of an awful result, but that otherwise things are fine. Rather, Dube et al. are merely placing a ceiling on how bad the employment drop will likely be.
If that doesn’t surprise you, then you probably won’t flinch when you see me favorably mention Daniel Kuehn either.
PK cherry picking and flasely rembering stuff that suits his views? Unpossible…
“In contrast, even intermediate forms of control for spatial
heterogeneity through the inclusion of either census division–
specific time period fixed effects (specification 2), division–
specific time fixed effects and state-level linear time
trends (specification 3), or metropolitan area–specific time
fixed effects (specification 4) leads the coefficient to be
close to 0 or positive. In our preferred specification 6, we
find that comparing only within contiguous border countypairs,
the employment elasticity is 0.016 when we also control
for overall private sector employment. Bounds for this
estimate rule out elasticities more negative than 0.147 at
the 90% confidence level and 0.178 at the 95% confidence
level.20 The implied labor demand elasticities are
also, as expected, close to 0 and insignificant at conventional
levels.
What are you saying that wages as a portion of production costs change the viability of a product based off of the profitability the price to the end user will pay for it and the utility good it offers has a link? Impossible. Dr. Murphy stop being part of a vast right wing conspiracy to keep people poor.
Bob,
I have a question/comment on:
‘If we are discussing proposals to increase the minimum wage to $10.10, then Dube et al. are telling us that they are 95-percent confident that teenage employment will fall by no more than about 6 percent If, instead, we consider the more aggressive proposals to raise the minimum wage to $15 per hour, then Dube et al.’s results assure us with 95-percent confidence that the hit to teenage employment will be no worse than about 16 percent”.
The fact that Dube et al. found a positive elasticity means that minimum wage is actually correlated to a increase in employment, right ?
If so, then a teenage worker faced with the prospect of an increased minimum wage might think (based on the study):
“With the $10.10 I have a greater than 50% chance of a decent pay rise and a better labor market. Even if the 95% negative probability is correct then I still have a 94% of a hefty rise offset by a 6% chance of losing my job. With the $15 proposal I get an even bigger rise and only an extra 10% chance of losing my job – I’m going to support this thing !”
If I read him correctly, Bob is saying “Krugman lied,” not “Minimum wage earning teenagers would oppose this if they had all the facts.”
Transformer yeah he could think that. Of course I’d like to hear him comment on the climate change literature if that’s how he rolls.
Krugman is obviously intentionally misleading his readers, but I’m going to assume that Krugman doesn’t care about teenage employment and thinks a loss capped at 16% is well worth the positives that those who keep their jobs will reap. If he wanted to, he would come up with an evasive way to express this and publish it in the editorial equivalent of a “that’s all you’ve got?”.
The disconnect here is that you treat economics as an objective area of study while Krugman treats it as a political tool. For Krugman, the truth doesn’t matter as long as his message is persuasive and his “facts” are “close enough” to reality. The field of economics would be more productive if y’all could just ignore the conscience of a liberal.
It seems much more likely that he meant what most people say – that there’s strong evidence for a null effect – and he got caught up in his own hyperbole.
Your suggestion here seems downright conspiratorial and unnecessarily aggressive.
But just wait – in fifteen minutes it will be me that’s allegedly bending over backwards to twist Krugman’s meaning around.
“But just wait – in fifteen minutes it will be me that’s allegedly bending over backwards to twist Krugman’s meaning around.”
You’re just like that Keshav Silmarillion guy. Sheesh.
You mean like the history of the Valar and the Maiar and the downfall of Númenor.
Kinda weird, but OK whatevs.
Yes. I pretend to have a hard time remembering how to write Keshav’s last name.
😛
Haha guest, if you think the spelling is hard, just try pronouncing it.
“Sri” rhymes with bee, “Ni” is like the beginning of nincompoop, “Va” has the same a sound as the word far, and “San” just sounds like the word sun. Emphasis is on the first syllable.
My first name just sounds like the letter K and the word “shove”, with the emphasis on the first syllable. Whew!
KUH’shove SRI’nifasun
… Fus Ro Dah?
I remember that my first job (at a hardware store) paid less than minimum wage. When I asked about this, they said minimum wage only applied to adult workers; because I was still in school, a lower wage applied to me. So I’m assuming that proposals to raise the minimum wage do not apply to teenagers anyway– or do they?
There’s a lower minimum wage for individuals under 20 but only for the first ninety days of their job. After ninety days they have to be paid the full minimum wage (the point being to separate people getting a job during summer vacation from those continuously supporting a family).
The only way being a student matters that I know of is if it’s an internship or something like that.
Sam T realizes he was ripped off.
What metric does the Austrian school provide to decide whether someone got ripped off under such circumstances?
People may get information at a later date and think, “Oh if I knew that back some time ago, I would have acted differently.”
This happens every time I see the lottery numbers, I think if only I knew those before they drew the numbers I could have been comfortably well off by now. Not a whole lot you can do about it though, or is there?
I’ve seen some people say that occupational licensure is good because it raises earnings in licensed industries.
It’s not much of a stretch to think those same people would argue for the minimum wage on similar grounds?
It is clearly good for some. In the case of the licensed industries, it makes more money for the people who get on the inside and helps keep out others (depending on how difficult it is to get a license, thus erecting a barrier to entry).
In the case of the $15 minimum wage, those people who keep their jobs, and have a reasonable position, are now safe because there’s no risk of being undercut by a lower priced competitor. Given that the employer cannot make a trade off between price and experience, and given that it is very difficult for anyone else to get any experience at that job, the current workers are safe.
A lot of other people are going to jump in here and “but it’s bad for the nation overall”… OK, how you gonna prove that without stooping to interpersonal utility comparison?
It is simply astounding how cavalier some people are in advocating for something they KNOW will coercively throw people out of work.
Don’t you understand MF? Allowing people to live and trade in peace vs. siccing the dog-shooting cops on them are nothing more than choices available to “policymakers”. Deciding whether to let the secular Assad stay in power or siccing jihadis on him are just choices available to “policymakers”.
http://tinyurl.com/p66wpkn
And “policymakers” aren’t arrogant or anything.
How can you doubt the wisdom of “policymakers”? Look at what they have done for Detroit.
http://iliketowastemytime.com/sites/default/files/ruins_of_detroit_yves_marchand_romain_meffre6.jpg
Actually, hospitals can be dangerous because of all the people dying, or at least sick in them. This was especially true before modern sanitation practices, but even today it isn’t unheard of to leave a hospital with an infection you didn’t have when you came in.