tag:blogger.com,1999:blog-1740670447258719504.post261089054799826133..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: "Seven Nobel laureates endorse higher U.S. minimum wage"Evanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-1740670447258719504.post-50385512389174165442014-01-17T05:38:36.698-05:002014-01-17T05:38:36.698-05:00This is one version of the B&M
http://econ.tau...This is one version of the B&M<br />http://econ.tau.ac.il/papers/macro/postmatch.pdfYouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-22191956577537716352014-01-17T05:35:52.714-05:002014-01-17T05:35:52.714-05:00Can you give a link to a paper that makes the mono...Can you give a link to a paper that makes the monopsony argument? It's been awhile since I looked at it. I did look up the Burdette & Mortensen matching model recently which I gather is what this argument is based on. However, in that model (or ye basic search model, like say in Romer's Adv Macro) minimum wage still decreases employment. In B&M a minimum wage *can* increase social welfare but that's different (the increase in utility of those who retain higher paying jobs is greater than those who experience longer unemployment spells). You can use the B&M monopsony model to argue for minimum wage, but you can't use it to explain why the empirical work does not detect employment effects.<br /><br />Personally I'm pretty sure something else is going on (probably the data just isn't good enough, not enough variation, close to equilibrium min wages, adjustments in hours rather than persons etc)YouNotSneaky!https://www.blogger.com/profile/06378267534638281151noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-78751651860785650282014-01-15T14:08:08.146-05:002014-01-15T14:08:08.146-05:00I feel like something needs to be clarified here. ...I feel like something needs to be clarified here. I agree there are lots of margins on which firms make adjustments. That's not implausible at all. What I find less plausible is that non-wage compensation can account for the nil employment effect. There just doesn't seem to be enough non-wage compensation in these sorts of jobs to accomplish that. The most reasonable alternative margin to adjust on is the productivity margin.<br /><br />I suppose in the way you've framed it I think there's value to it. Even if you want to employ a monopsony argument (which I think is entirely appropriate for undergraduates), there is going to be a point where it cuts into employment. If you want to say that with a reductio, that sounds fine to me. I don't think much of reductios on this generally because the only point they could possibly make is so elementary it doesn't need making to anyone. It follows, then, that if you're teaching elementary economics maybe it makes more sense.<br /><br />Unfortunately, when you see people use reductios they're using them badly even by the standards that I've laid out here.<br /><br />I think it meets with hostility because it gives the impression that the people that state the reductio think their opponents are dunces.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-79444778576464985972014-01-15T13:57:24.154-05:002014-01-15T13:57:24.154-05:00How could an empirical study possible account for ...How could an empirical study possible account for the myriad ways in which employers might cut back on non-wage costs? I'm not saying they do/don't or will/won't, it just seems a stretch to decide that it is "implausible". <br /><br />On a separate point Daniel, I'd like to get your thoughts on the reduction ad absurdum argument against minimum wage legislation. Obviously the minimum wage question is extremely complex but do you think there's value in explaining to say, an undergraduate, that a mandated minimum wage of $100 per hour would have negative employment effects? Not using the reduction as an argument against whatever the latest proposed increase is here, just wondering if you as a teacher think it has pedagogical usefulness. Do you think it illustrates a general economic principle?<br /><br />In my experience it meets with hostility from people who think (maybe because of C&K study) that a small increase would be fine, even though they totally agree that a $100 minimum wage would be disastrous.Old Odd Jobshttps://www.blogger.com/profile/14239083003799351747noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-39029789900411533382014-01-15T13:48:03.528-05:002014-01-15T13:48:03.528-05:00"... but in this market I find the idea that ..."... but in this market I find the idea that they are reducing other forms of compensation implausible."<br /><br />Other benefits aren't necessarily in the noise, take a look at McDonald's staff benefits, for example.<br /><br />"The second bullet is the most likely, but I don't know. Without evidence I feel like it doesn't make sense to jettison monopsony, which is perfectly reasonable."<br /><br />You seem to think it's reasonable, I don't agree. Where I work there are very many companies who employ at the minimum wage or close to it. I don't see how there can be a monopsony. I remember a while ago that you talked about the argument that it's time consuming and costly to change jobs. I agree with that, but I can't see how it provides a monopsony over any significant time scale (if it did then business owners have a free lunch, how would that happen?).<br /><br />Anyway, my point was that there are other possible causes than the monopsony argument, that's why I listed some of them. As you say modern studies take into account the things I mention at the end. However, the case for the minimum wage is been made mostly by meta-studies that aggregate earlier studies, but those earlier studies don't take into account all of the factors I mention and some have other flaws I haven't mentioned.<br />Currenthttps://www.blogger.com/profile/08645195276844244481noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-35932977908716853472014-01-15T12:18:26.436-05:002014-01-15T12:18:26.436-05:00In other labor markets you can conceive of non-sal...In other labor markets you can conceive of non-salary compensation that could make up for it, but in this market I find the idea that they are reducing other forms of compensation implausible. There's just not much in the way of compensation besides the paycheck for minimum wage workers. Certainly no amenities at the place of employment are going to come close - the most important ones are probably mandated by law themselves.<br /><br />The second bullet is the most likely, but I don't know. Without evidence I feel like it doesn't make sense to jettison monopsony, which is perfectly reasonable. The only reason to jettison that in the absence of evidence on these other margins is if you REALLY don't want the monopsony story to be true, and that's not a good way to proceed IMO.<br /><br />The last three points confuse me. The third one is fine as far as it goes and should be easy to test for. You can't get at that in the C&K study but others look at several periods before and after implementation and my understanding is they don't find evidence of this.<br /><br />The fourth bullet would definitely be picked up in most modern studies. It's not like people stop looking at the employment effects a quarter out.<br /><br />The fifth bullet is irrelevant. As far as I know these studies track employment levels, not unemployment levels. That's as it should be. The split between unemployment and NILF is a whole different issue.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-45133221842929671062014-01-15T12:09:59.146-05:002014-01-15T12:09:59.146-05:00I think the fact that the endorsement did not call...I think the fact that the endorsement did not call anyone a cockroach cost them Krugman's signature.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-25690622266529581352014-01-15T11:29:09.033-05:002014-01-15T11:29:09.033-05:00WTH? I had just assumed Krugman was one of the 7, ...WTH? I had just assumed Krugman was one of the 7, but he's not. Bob Murphyhttps://www.blogger.com/profile/04001108408649311528noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-27944134098380411132014-01-14T21:56:30.740-05:002014-01-14T21:56:30.740-05:00"The nil effect in the empirical literature t..."The nil effect in the empirical literature tells me there's something to the monopsony arguments. The data just don't make sense otherwise"<br /><br />I'm not so sure about that.<br />NSW point out that (at least Dube et al) show a nil effect due to a nil effect on wages, when there is significant wage growth following a minimum wage increase, there is also significantly negative employment effect. If wages are static, even under conditions of ideal, perfectly-competitive labor markets we *should* see a nil effect on employment.aaronnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-79132851617698389382014-01-14T17:53:32.056-05:002014-01-14T17:53:32.056-05:00"The nil effect in the empirical literature t..."The nil effect in the empirical literature tells me there's something to the monopsony arguments. The data just don't make sense otherwise"<br /><br />There are plenty of other possible reasons:<br />* Employers are reducing perks instead of pay.<br />* Employers are making job conditions worse instead of cutting workers, making people do more or do less sociable hours.<br />* Employers who know about the minimum wage change ahead of time are using natural wastage (people leaving) instead of lay-offs directly afterwards. To avoid lay-offs hurting staff morale.<br />* Employers who don't know about the minimum wage change ahead of time are using natural wastage after the change.<br />* Employees who are let go are leaving the labour force instead of signing on as unemployed.<br />Currenthttps://www.blogger.com/profile/08645195276844244481noreply@blogger.com