I think we all agree that the minimum wage will cause unemployment, since the labor markets which it impacts are fairly competitive. However, if there is no perfect elasticity for labor demand, then an increase in the minimum wage will create more gains than losses. Therefore, a 10% increase in the minimum wage won't decrease employment by 10%, so there's a positive income gain for minimum wage workers.
Juma: I said it's about OVERALL NET GAIN. I didn't mean to imply there wouldn't be any losses
I said it's about OVERALL NET GAIN. I didn't mean to imply there wouldn't be any losses
You call it an overall net gain when your numbers exclude people getting coerced out of a job due to government intervention. This is an injustice. I don't think you can call something an overall net gain when people lose their jobs due to coercion. It's actually called criminal.
Put bluntly, talk of an amalgamated loss or gain is faulty. On the macro side, ivory tower economists end up taking something of a statist approach (seeking "amalagated gains" as a means of self fulfillment). In asking if it is an "emperical question", you appear to be refering to its affect on the social economy. Nonetheless, the question of "desirability" is strictly subjective - a group of people cannot desire something, only its members. If you want to assess upshot of the implamentation of minimum wage that's fine; but, if it's truly "desirability" that you're after you'll have to be a bit more introspective and use your own subjective scale of value (which, in turn, will simply be a reflection of your personal values). hope this helps..
Juma: krazy kaju: So is a 1000% increase in the minimum wage justifiable if it won't increase unemployment by 1000%? In theory, yes because there's an overall welfare gain. Of course, that's why we're saying it's an empirical question, because at that level of an increase the elasticity will likely always be perfect, so the policy is not desirable. A minimum wage increase will only increase welfare with small incremental hikes and at low levels
krazy kaju: So is a 1000% increase in the minimum wage justifiable if it won't increase unemployment by 1000%?
So is a 1000% increase in the minimum wage justifiable if it won't increase unemployment by 1000%?
In theory, yes because there's an overall welfare gain. Of course, that's why we're saying it's an empirical question, because at that level of an increase the elasticity will likely always be perfect, so the policy is not desirable. A minimum wage increase will only increase welfare with small incremental hikes and at low levels
You do realize that even only a 100% increase in unemployment would be a doubling, right? That would leave millions of people out to starve in the streets. That's what you get for your "net gain."
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