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That's the idealized assumption . . . I think the data supports it pretty well, too. Minimum wage is reasonably well correlated with unemployment among lower

• _delirium 14y ago
  Afaict, this PDF makes a "correlation=causation" assertion, and doesn't even attempt to account for any other variables of the past 40 years, implicitly attributing all employment variation from 1970s to the present on minimum wage levels... One of these studies might be a better starting point: http://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies http://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies
  • wtvanhest 14y ago
    Luckily we now have a way to test it... This machine.
    • saraid216 14y ago
      I'd rather take the machine.
  • Dove 14y ago
    Correlation may not equal causation, but it does definitely count as empirical support. The slides I posted may not prove that minimum wage causes unemployment among the lower skilled, but they certainly support the idea. At a minimum, they move it away from "idealized assumption" toward "something that survived contact with the data". And really, does economics ever get much better than that? I think it rarely gets even that good. When you have a correlation, the logical possibilities are that A causes B, B causes A, C causes both, or the correlation isn't real -- just random noise. I think the last option is pretty unlikely, and I'm having a very hard time imagining how unemployment among lower skilled workers would cause minimum wage increases, or what in the world would cause both. Particularly persuasive to me is that the strength of the relationship changes with education level -- exactly what I'd expect. No, I suppose I don't know for sure. It's always possible something else causes both, and sure, the dots are all over the map even if there is a relationship; it is a complex system. But to be honest, I really do find that data pretty persuasive. I didn't see anything in the Wikipedia entry that changed my mind much, either. Mostly it was unrelated to what I posted: studies specifically on teenagers (which showed more or less what I'd expect, that minimum wage increases decreased employment), and a comment that in a complex system, lots of factors affect unemployment. (Sure, of course). I don't know, it says "Economists now disagree", but it doesn't say much about what changed their minds. I don't feel bound to change mine just because they did, though it's certainly something to take seriously.
    • arbitrarywords 14y ago
      Can anyone recommend any sensible texts on this? Ideally something that covers minimum wages/unemployment, places the discussion in an international context, and least shows an awareness of the idea of a spectrum between fully employed and a hypothetical fully automated society? (By sensible I probably mean something coming from more of a first principles/psychology/game theory angle than something that ends up (trying to advance/relying on the assumptions of) some political/economic ideology)