Monday, August 23, 2004

A study against minimum wage

Here's a new study from the Employment Policies Institute that makes the case against minimum wage.
In this study, Drs. Peter Arcidiacono and Thomas Ahn investigate claims of positive employment effects resulting from a minimum wage. The study first highlights the multitude of reasons why, under the classical economic model—the widely accepted model of economic behavior—an increase in the minimum wage cannot lead to an increase in employment. Then, by relaxing certain assumptions critical to the classical model, a search model is constructed. This model—which runs contrary to commonly accepted economic theory—is created to study a hypothetical situation of positive employment effects from a minimum wage increase? Even in this case, the authors show that those individuals who most value minimum wage jobs—current employees—end up with a higher probability of being unemployed after a minimum wage increase. In fact, all increases in the minimum wage under this model result in decreased employment prospects for individuals.
What a strange concept, that government telling businesses what to do is detrimental to the economy.

0 Comments:

Post a Comment

<< Home