Tuesday, February 25, 2014

Nancy Folbre on local minimum wage policies

Brad DeLong is apparently trying to break my blog, by linking to a bunch of recent minimum wage posts on here. He is far too generous in saying that I have "delved deeply" into the literature. I have spent some time on the side of everything else trying to get my head around it, though, and of course I've yammered a lot. Perhaps that will do.

One of the things that some people mistakenly assume is that I'm a big fan of the federal minimum wage because I find the literature orbiting around the Dube, Lester, and Reich (2010) paper compelling. That's not entirely true. I've said in the past that I don't lose sleep over the federal minimum wage because of this research, but I cannot be enthusiastic about it either because I am concerned about the diversity of local labor markets and the prospect that average treatment effects obscure positive effects in some markets and negative effects in others where the minimum wage is far more binding (Dube has done some work I believe on variation in local effects but I have not "delved deeply" into that yet).

My answer has been an answer that I often turn to: federalism and diverse local responses. Obviously the federal minimum wage is not the only game in town anyway, and we should expect state and local electorates to be more responsive to local labor market conditions that may warrant a lower, or even a higher minimum wage than the federal minimum wage.

This finally brings me to the estimable Nancy Folbre (Ooh! speaking of "new acquisitions" in my previous post, I also recently got a copy of Folbre's book "Valuing Children: Rethinking the Economics of the Family"). She has a post up on the success of these local efforts to raise minimum wages and even institute living wages. Folbre summarizes the findings in two recent books of interest: What Works for Workers?, from the Russell Sage Foundation, and When Mandates Work, from the University of California Press.


  1. Does this fit in with your thinking on local v. federal?


    1. Yep. Last year I went through these sorts of calculations with Ryan Murphy. Using one measure of the cost of living I estimated that Los Angeles had a lower real minimum wage than Birmingham Alabama.

      I have been wanting to do a comprehensive analysis of this sort - write it up formally and submit it somewhere I mean. I haven't had the chance to and unfortunately won't until the summer at the earliest.

      I just took a look at this - I'll try to read it more closely in the next couple days and post on it. Thanks for sharing - it's not every day I get to agree with Mark Perry.


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