Tea at Trianon: The Empirical Reality of the Minimum Wage

John Wilson Croker on Marie-Antoinette

"We have followed the history of Marie Antoinette with the greatest diligence and scrupulosity. We have lived in those times. We have talked with some of her friends and some of her enemies; we have read, certainly not all, but hundreds of the libels written against her; and we have, in short, examined her life with– if we may be allowed to say so of ourselves– something of the accuracy of contemporaries, the diligence of inquirers, and the impartiality of historians, all combined; and we feel it our duty to declare, in as a solemn a manner as literature admits of, our well-matured opinion that every reproach against the morals of the queen was a gross calumny– that she was, as we have said, one of the purest of human beings."

~from History of the Guillotine by John Wilson Croker, 1844

Edmund Burke on Marie-Antoinette

"It is now sixteen or seventeen years since I saw the queen of France, then dauphiness, at Versailles; and surely there never lighted on this orb, which she hardly seemed to touch, a more delightful vision. I saw her just above the horizon, decorating and cheering the elevated sphere she had just begun to move in, glittering like a morning star full of life and splendor and joy. Oh, what a revolution....Little did I dream that I should have lived to see such disasters fall upon her, in a nation of gallant men, in a nation of men of honor and of cavaliers! I thought ten thousand swords must have leaped from their scabbards, to avenge even a look which threatened her with insult. But the age of chivalry is gone; that of sophisters, economists, and calculators has succeeded...."

~Edmund Burke, October 1790

Thursday, August 16, 2018

The Empirical Reality of the Minimum Wage

From AIER:

So what, really, is the state of modern empirical research into minimum wages? Let’s start with an unambiguous statement: Paul Krugman is factually mistaken. Plenty of recent evidence indicates that raising the minimum wage costs jobs. As long-time minimum-wage researcher David Neumark concluded in a December 2015 article for the Federal Reserve Bank of San Francisco:

Coupled with critiques of the [econometric] methods that generate little evidence of job loss, the overall body of recent evidence suggests that the most credible conclusion is a higher minimum wage results in some job loss for the least-skilled workers — with possibly larger adverse effects than earlier research suggested.

My own extensive reading of minimum-wage research confirms Neumark’s conclusion. That said, it is also the case that quite a few, although not a majority, of the empirical studies of minimum-wage hikes find no evidence that these hikes destroy jobs. What explains these conflicting research results?

One reason for these inconsistent conclusions is simply the differences in skill and meticulousness that separate some researchers from others. Economic studies vary greatly in quality and reliability. Not every piece of published work by Ph.D. economists is trustworthy. Far from it. But even after excluding all shoddily done studies of minimum wages, we’re still left with conflict in the conclusions. Fortunately, economic theory itself supplies clues as to why. (Read more.)