Bryan's fundamental point: Economic theory lets y'all vastly broaden the arrive at of sense that y'all tin select to i interrogation -- the number of minimum reward inwards Seattle , for example. Economic theory also forces logical consistency that would non otherwise live obvious. You can't debate that the project demand flexure is vertical today , for the minimum wage , as well as horizontal tomorrow , for immigrants. There is i project demand flexure , as well as it is what it is. Economics lets i sense illuminate the other , as well as done right forces politically uncomfortable consistency on those views. You can't debate that mucilaginous too-high reward campaign unemployment inwards recessions as well as inwards Hellenic Republic , as well as non debate that mucilaginous too-high reward from minimum reward laws produce non campaign unemployment inwards Seattle.
This sort of integrated thinking is far also rare inwards evaluating economical policies. But that's the error of economists , non of economics.
Bryan:
Research doesn't accept to officially live well-nigh the minimum wage to live highly relevant to the debate. All of the next empirical literatures back upward the orthodox persuasion that the minimum wage has pronounced disemployment effects:
1. The literature on the number of low-skilled immigration on native wages. A major contributor here , most famously for his study of the Mariel boatlift. These results imply a highly elastic demand flexure for low-skilled project , which inwards plough implies a large disemployment number of the minimum wage.
This consensus with immigration researchers is as well as then stiff that George Borjas titled his dissenting paper "The Labor Demand Curve Is Downward Sloping." If this were a newspaper on the minimum wage , readers would assume Borjas was contention that the project demand flexure is downward-sloping rather than vertical. Since he's writing about immigration , all the same , he's genuinely claiming the project demand flexure is downward-sloping rather than horizontal!
2. The literature on the number of European project marketplace regulation. Most economists who report European labor markets acknowledge that strict project marketplace regulations are an of import campaign of high long-term unemployment. When I inquire random European economists , they tell me , "The economic science is clear; the job is politics ," pregnant that European governments are afraid to encompass the deregulation they know they need to restore total employment. To live fair , high minimum reward are alone i facet of European project marketplace regulation. But if y'all uncovering that i sort of rule that raises project costs reduces job , the reasonable inference to depict is that any regulation that raises project costs has similar effects - including , of assort , the minimum wage.
3. The literature on the effects of cost controls inwards general. There are vast empirical literatures studying the effects of cost controls of housing (rent control) , agriculture (price supports) , unloosen energy (oil as well as gas cost controls) , banking (Regulation Q) etc. Each of these literatures bolsters the textbook storey well-nigh the number of cost controls - as well as thus ipso facto bolsters the textbook storey well-nigh the number of cost controls inwards the project market.
If y'all object , "Evidence on rent command is alone relevant for housing markets , not labor markets ," I'll retort , "In that instance , bear witness on the minimum wage inwards New Bailiwick of Jersey as well as Pennsylvania inwards the 1990s is alone relevant for those 2 states during that decade." My point: If y'all can't generalize empirical results from i marketplace to some other , y'all can't generalize empirical results from i solid lay down to some other , or i era to another. And if that's what y'all recollect , empirical operate is a waste product of time.
4. The literature on Keynesian macroeconomics. If you're even mildly Keynesian , y'all know that downward nominal wage rigidity occasionally leads to lots of involuntary unemployment. If , similar most Keynesians , y'all recollect that your persuasion is backed yesteryear overwhelming empirical evidence , I accept a challenge for you: Explain why market-driven downward nominal wage rigidity leads to unemployment without implying that a government-imposed minimum wage leads to unemployment. The challenge is tough because the whole signal of the minimum wage is to intensify what Keynesians correctly run across every bit the fundamental campaign of unemployment: The failure of nominal reward to autumn until the marketplace clears.
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