Monopsony and the Minimum Wage

[Leviathan]

What impact do labor market monopsony and its derivatives have on the employment effects of the minimum wage?

I'm of the opinion that the concept of the minimum wage necessarily reducing employment is an assumption that holds true only in the crude textbook model of the labor market, and is not suited to actual reality, since monopsony power (and more broadly, oligopsonistic conditions in labor markets) complicates matters. Firms are confronted with an upward sloping labor supply curve rather than an infinitely elastic labor supply curve. To simplify all this more, the imperfections of labor markets make things a hell of a lot more complicated than is immediately evident, and claiming that minimum wages increase unemployment is not so cut and dry, considering that the absence of infinite elasticity (few would argue that cutting wages by a cent would result in worker resignation, for example) is an element in the general deficiencies of labor markets. This is why we've encountered empirical research into the effects of the minimum wage on employment.

Do you agree or disagree, and why?

 

[evilfunnystuff]

Do you agree or disagree, and why?

this is a joke right stop throwin around all these fancy words and confusing/complicating the issue

minimum wage is bs because anyone should be able to work for whatever they want if i can volunteer my time for free why cant i sell it for a buck an hour if i choose to

some people say oh well i cant support a family on minimum wage well ya you shouldnt start a family you cant support and i dont think i should have to pay some 16 year old kid enough to raise a family for washin dishes

forcing employers to pay a minimum wage reduces their capitol (wich could be used to hire other workers) and raises their prices for everyone

minimum wage = higher prices less jobs

 

[evilfunnystuff]

YouTube - Pelosi's Double Standard on the Minimum Wage

http://coyoteprime-runningcauseicantfly.blogspot.com/2009/07/peter-schiff-

Saturday, July 11, 2009
Peter Schiff, "Minimum Wage, Maximum Stupidity"

"In a free market, demand is always a function of price: the higher the price, the lower the demand. What may surprise most politicians is that these rules apply equally to both prices and wages. When employers evaluate their labor and capital needs, cost is a primary factor. When the cost of hiring low-skilled workers moves higher, jobs are lost. Despite this, minimum wage hikes, like the one set to take effect later this month, are always seen as an act of governmental benevolence. Nothing could be further from the truth.

When confronted with a clogged drain, most of us will call several plumbers and hire the one who quotes us the lowest price. If all the quotes are too high, most of us will grab some Drano and a wrench, and have a go at it. Labor markets work the same way.

Before bringing on another worker, an employer must be convinced that the added productivity will exceed the added cost (this includes not just wages, but all payroll taxes and other benefits.) So if an unskilled worker is capable of delivering only $6 per hour of increased productivity, such an individual is legally unemployable with a minimum wage of $7.25 per hour.

Low-skilled workers must compete for employers' dollars with both skilled workers and capital. For example, if a skilled worker can do a job for $14 per hour that two unskilled workers can do for $6.50 per hour each, then it makes economic sense for the employer to go with the unskilled labor. Increase the minimum wage to $7.25 per hour and the unskilled workers are priced out of their jobs. This dynamic is precisely why labor unions are such big supporters of minimum wage laws. Even though none of their members earn the minimum wage, the law helps protect their members from having to compete with lower-skilled workers.

Employers also have the choice of whether to employ people or machines. For example, an employer can hire a receptionist or invest in an automated answering system. The next time you are screaming obscenities into the phone as you try to have a conversation with a computer, you know what to blame for your frustration.

There are numerous other examples of employers substituting capital for labor simply because the minimum wage has made low-skilled workers uncompetitive. For example, handcarts have replaced skycaps at airports. The main reason fast-food restaurants use paper plates and plastic utensils is to avoid having to hire dishwashers.

As a result, many low-skilled jobs that used to be the first rung on the employment ladder have been priced out of the market. Can you remember the last time an usher showed you to your seat in a dark movie theater? When was the last time someone other than the cashier not only bagged your groceries, but also loaded them into your car? By the way, it won't be long before the cashiers themselves are priced out of the market, replaced by automated scanners, leaving you to bag your purchases with no help whatsoever.

The disappearance of these jobs has broader economic and societal consequences. First, jobs are a means to improve skills so that low skilled workers can offer greater productivity to current or future employers. As their skills grow, so does their ability to earn higher wages. However, remove the bottom rung from the employment ladder and many never have a chance to climb it.

So the next time you are pumping your own gas in the rain, do not just think about the teenager who could have been pumping it for you, think about the auto mechanic he could have become - had the minimum wage not denied him a job. Many auto mechanics used to learn their trade while working as pump jockeys. Between fill-ups, checking tire pressure, and washing windows, they would spend a lot of time helping - and learning from - the mechanics.

Because the minimum wage prevents so many young people (including a disproportionate number of minorities) from getting entry-level jobs, they never develop the skills necessary to command higher paying jobs. As a result, many turn to crime, while others subsist on government aid. Supporters of the minimum wage argue that it is impossible to support a family on the minimum wage. While that is true, it is completely irrelevant, as minimum wage jobs are not designed to support families. In fact, many people earning the minimum wage are themselves supported by their parents. [Editor's note: ...or "payrents" as they are now called.]

The way it is supposed to work is that people do not choose to start families until they can earn enough to support them. Lower wage jobs enable workers to eventually acquire the skills necessary to earn wages high enough to support a family. Does anyone really think a kid with a paper route should earn a wage high enough to support a family?

The only way to increase wages is to increase worker productivity. If wages could be raised simply by government mandate, we could set the minimum wage at $100 per hour and solve all problems. It should be clear that, at that level, most of the population would lose their jobs, and the remaining labor would be so expensive that prices for goods and services would skyrocket. That's the exact burden the minimum wage places on our poor and low-skilled workers, and ultimately every American consumer.

Since our leaders cannot even grasp this simple economic concept, how can we expect them to deal with the more complicated problems that currently confront us?"
- Peter Schiff, http://www.321gold.com/editorials/schiff/schiff071009.html

 

[Leviathan]

I've never been impressed by Peter Schiff. Heterodox economics is based on predictions of the failures of actually existing capitalism, so his occasionally accurate (and often inaccurate) predictions have never illustrated some unique value of Austrian economics. Indeed, Marxist crisis theory could probably explain much of the current economic problems more aptly, which has accounted for the recent renewed popularity of Das Kapital. On this particular issue, Schiff's ignorance of labor economics breeds an ignorance of monopsony and of the empirical literature into the minimum wage.

Refer to Card and Krueger's Minimum wages and employment: a case study of the fast-food industry in New Jersey and Pennsylvania:

On April 1, 1992 New Jersey's minimum wage increased from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum wage remained fixed at $4.25 per hour) yield simple estimates of the effect of the higher minimum wage. Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent. We also compare employment growth at stores in New Jersey that were initially paying high wages (and were unaffected by the new law) to employment changes at lower-wage stores. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment.

I have a feeling some of us should be reading that instead of Henry Hazlitt.

 

[krazy kaju]

I do not know of a single example of a monopsony actually existing. Do you?

In any case, the problem with labor market models is that they assume that labor is homogeneous, which it isn't. Different people have different abilities and skills that makes their labor worth different amounts. So even if there were a monoposony and a minimum wage were created to fight such a monopsony, then the minimum wage would still cause unemployment, since the least able workers wouldn't be profitable enough to be hired.

 

[krazy kaju]

I have a feeling some of us should be reading that instead of Henry Hazlitt.

Don't be a fool. Many people are familiar with that study. The fact of the matter is that that study proves absolutely nothing. There are several other variables which could effect the difference between New Jersey and Pennsylvania employment: population size/ratios, worker skills, worker education levels, investment levels, regulatory structures, business taxes, personal income taxes, etc. Empirical evidence is absolutely useless without economic theory.

 

[tmosley]

ITT ban evasion.

 

[ghengis86]

what's up shaka?

 

[Leviathan]

I do not know of a single example of a monopsony actually existing. Do you?

Since labor market monopsony requires only upward sloping labor supply curves, monopsony certainly exists.

In any case, the problem with labor market models is that they assume that labor is homogeneous, which it isn't. Different people have different abilities and skills that makes their labor worth different amounts. So even if there were a monoposony and a minimum wage were created to fight such a monopsony, then the minimum wage would still cause unemployment, since the least able workers wouldn't be profitable enough to be hired.

That's the problem with the orthodox model of the labor market. As I mentioned in the OP, the monopsony model is constructed in direct contrast to this, since consideration of the heterogenous elements of labor markets must be considered.

Don't be a fool. Many people are familiar with that study. The fact of the matter is that that study proves absolutely nothing. There are several other variables which could effect the difference between New Jersey and Pennsylvania employment: population size/ratios, worker skills, worker education levels, investment levels, regulatory structures, business taxes, personal income taxes, etc. Empirical evidence is absolutely useless without economic theory.

LOL! You're not actually under the impression that econometric analysis entails incorporation of raw data without variable controls, are you?

Forgive me, but instead of inaccurately assuming that researchers assume that ceteris paribus conditions exist and advance from there, it would be better to identify specific methodological deficiencies in this paper or post superior research...though you should note that there's a substantial literature that illustrates the effect I mentioned, not an individual study. For example, consider Dickens, Machin, and Manning's The Effects of Minimum Wages on Employment: Theory and Evidence from Britain

Recent work on the economic effects of minimum wages has stressed that the standard economic model, where increases in minimum wages depress employment, is not supported by empirical work in some labor markets. We present a general theoretical model whereby employers have some degree of monopsony power, which allows minimum wages to have the conventional negative impact on employment but which also allows for a neutral or positive impact. Studying the industry‐based British Wages Councils between 1975 and 1992, we find that minimum wages significantly compress the distribution of earnings but do not have a negative impact on employment.

 

[ghengis86]

seriously dude, I thought this was your last post ever?
http://www.ronpaulforums.com/showthread.php?t=197580&highlight=shaka

why did you come back?

 

[Leviathan]

seriously dude, I thought this was your last post ever?
http://www.ronpaulforums.com/showthread.php?t=197580&highlight=shaka

why did you come back?

Is "Shaka" also "Onion Eater"? If so, he's been offering money for people to copy and paste some content about George Mason University onto this forum. I think I would have collected by now if I have an interest.

 

[Epic]

Leviathan - a better place to post your question is on the mises.org forums. They will know more.

Here are some links from the mises website:

Austrian Walter Block Critiques Monopsony Theory
http://mises.org/journals/scholar/block12.pdf

Don Bellante on Monopsony:
http://mises.org/journals/qjae/pdf/qjae10_2_2.pdf

I just want to make several points:

1. Regardless of economics, a minimum wage is a violation of the individual's right to contract freely.
2. Historical/Empirical evidence can be fitted into whatever storyline. Hence the need for theory.
3. Without the market distortions introduced by government, markets would behave closer to the idealized market.
4. A minimum wage destroys the signal that accompanies low wages for certain employment
4a. - the signal that people should not devote economic resources to providing this work (become a low wage employee) is destroyed (because the minimum wage is higher than the market wage). This is an economic misallocation.
4b. - the signal that there is a big incentive to become a purchaser of low wage work is destroyed because the entrepreneur/hirer would have to pay minimum wage rather than market wage.
4c. - employers will not be able to allocate the extra money that is spent on the difference between minimum wage and market wage to other ends. This is the SEEN and UNSEEN.
5. More resources will flow to automation machinery because that becomes cheaper on a relative basis. And thereafter, there is less need for even minimum wage work because investments in automation machinery have been made. Whereas some low wage employees may keep working at their under-minimum-wage jobs (illegally), with the increased resources devoted to automation machinery, prices come down, and even the employees working under the table under minimum wage will find their productivity undercut by machinery due to the increased development thereof.
6. Regime Uncertainty - If businesses suspect that minimum wage will change in the future, they might not locate in those areas. They might hire less work than they would otherwise. They may invest more in automation machinery.
7. Less Business Investment will be made in minimum wage areas. Capital flows to freedom.
8. Incentives matter - lessening the impact of having low productivity will hurt the incentive to become more productive.

Prices in the economy are signals. Over time, they control the flow of resources. At any given time, an intervention can be made which takes advantage of the efficiency of the current system, and diverts resources to chosen goals. But all of those resources wouldn't have arisen in that time and place were it not for the previous landscape of signals - which was just destroyed.

I find the entire analysis of monopsony to be a bit funny - okay so a monopsony is when there are just a couple of buyers of labors, and many sellers. But we can't assume that the probability of this scenario occuring is not affected by market distortions - such as the minimum wage. The minimum wage in itself gives an incentive for people to be sellers of labor and not buyers of labor. "Fixing" monopsony just ensures you get more of it. The tyranny of good intentions.

 

[Leviathan]

Leviathan - a better place to post your question is on the mises.org forums. They will know more.

Here are some links from the mises website:

Austrian Walter Block Critiques Monopsony Theory
http://mises.org/journals/scholar/block12.pdf

Don Bellante on Monopsony:
http://mises.org/journals/qjae/pdf/qjae10_2_2.pdf

As to those pieces, I've skimmed through that first paper before. Apart from of course utterly ignoring the empirical literature into the topic, Block focuses on textbook monopsony, which is an intentional avoidance of the issue of dynamic monopsony, which is quite detached from a static model of the labor market and is actually the primary form studied in minimum wage research and analysis. I've not seen the second, but I'd hope that it's of superior quality.

 

[krazy kaju]

Since labor market monopsony requires only upward sloping labor supply curves, monopsony certainly exists.

A monoposony is when there exists a single buyer for a product. So a labor market monoposony would exist if there were only one employer.

An upward sloping labor supply curve has nothing to do with monopsonies. An upward sloping labor supply curve exists by virtue of the fact that higher wages would induce people to work more due to higher compensation for lost leisure.

That's the problem with the orthodox model of the labor market. As I mentioned in the OP, the monopsony model is constructed in direct contrast to this, since consideration of the heterogenous elements of labor markets must be considered.

No, that's the problem with both the traditional model and with the monopsony model you were attempting to describe. Every single labor market model assumes that labor is a homogenous good. If it didn't, then it would be literally impossible to draw a single supply curve, since there would be too many unknown variables.

LOL! You're not actually under the impression that econometric analysis entails incorporation of raw data without variable controls, are you?

No, as an economics student, I am not. I am under the impression, however, that you have never even taken a microeconomics course.

Forgive me, but instead of inaccurately assuming that researchers assume that ceteris paribus conditions exist and advance from there, it would be better to identify specific methodological deficiencies in this paper or post superior research...though you should note that there's a substantial literature that illustrates the effect I mentioned, not an individual study. For example, consider Dickens, Machin, and Manning's The Effects of Minimum Wages on Employment: Theory and Evidence from Britain

I don't think you understand. Empirical economics does not exist. There is no possible way to incorporate every single variable, due to how heterogenous the labor market is and minute changes in laws, regulations, taxes, interest rates, population, and other conditions that can effect the labor market.

In order to give any empirical evidence any weight, you must first have a theory, due to the fact that it is impossible to account for every single variable. These theories, if properly constructed in an a priori fashion, are much stronger than any evidence since they must be true. That's Intro to Logic for you right there. That's two classes you must have failed in college.

 

[krazy kaju]

In any case, let's consider what would happen if there were an actual monopsony in a labor market. First, wages would have a natural floor, following Ricardo's so-called "iron law of wages." Second, the monopsony would still have to keep wages high enough in order to prevent any competitors from ruining the monopsony. Third, real wages would grow regardless, since the extra profits collected by the monopsony would naturally be invested into expanding profits, which would expand the capital base, and thereby also expand the amount of goods produced.

 

[TastyWheat]

Well, since there are few if any monopsonies in the country doesn't that make a strong case for no minimum wage laws (especially federal)?

 

[Leviathan]

A monoposony is when there exists a single buyer for a product. So a labor market monoposony would exist if there were only one employer.

An upward sloping labor supply curve has nothing to do with monopsonies. An upward sloping labor supply curve exists by virtue of the fact that higher wages would induce people to work more due to higher compensation for lost leisure.

Your ignorance of labor economics certainly parallels the profound ignorance of economics in general that I've witnessed you exhibit.

No, as an economics student

This made me laugh.

I don't think you understand. Empirical economics does not exist. There is no possible way to incorporate every single variable, due to how heterogenous the labor market is and minute changes in laws, regulations, taxes, interest rates, population, and other conditions that can effect the labor market.

In order to give any empirical evidence any weight, you must first have a theory, due to the fact that it is impossible to account for every single variable. These theories, if properly constructed in an a priori fashion, are much stronger than any evidence since they must be true. That's Intro to Logic for you right there. That's two classes you must have failed in college.

As with so many other things, you are the individual here that does not understand. No one disputes the influence of uncontrollable factors in preventing empirical perfection. We are instead convinced by general accuracy, which is confirmed by general consensus among empirical research of superior quality. It's therefore unsurprising that the qualitative analysis in other disciplines confirms the quantitative analysis of economics, such as the agreement between psychology and economics on the association between income and happiness.

As you adhere to Austro-propertarian ideology with the fervor and ignorance of a creationist, I could not expect you to understand. Austrian ideology is to economics as creationism is to evolutionary biology, after all.

In any case, let's consider what would happen if there were an actual monopsony in a labor market. First, wages would have a natural floor, following Ricardo's so-called "iron law of wages." Second, the monopsony would still have to keep wages high enough in order to prevent any competitors from ruining the monopsony. Third, real wages would grow regardless, since the extra profits collected by the monopsony would naturally be invested into expanding profits, which would expand the capital base, and thereby also expand the amount of goods produced.

Continuing with the actual definition of labor market monopsony, here's reality for you: Consult Dickens et al.'s The Effects of Minimum Wages on Employment: Theory and Evidence from Britain. Consider the abstract:

Recent work on the economic effects of minimum wages has stressed that the standard economic model, where increases in minimum wages depress employment, is not supported by empirical work in some labor markets. We present a general theoretical model whereby employers have some degree of monopsony power, which allows minimum wages to have the conventional negative impact on employment but which also allows for a neutral or positive impact. Studying the industry‐based British Wages Councils between 1975 and 1992, we find that minimum wages significantly compress the distribution of earnings but do not have a negative impact on employment.

Note that the heterogenous nature of labor markets allows for negative employment effects in a monopsony model, while the orthodox model does not allow for any broad positive employment effects. More importantly, it's likely that there are additional heterogeneities in employment trends that render many of the analyses you refer to deficient, as evidenced by an empirical source such as Dube, Lester, and Reich's Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties:

Local case studies of minimum wages typically find no significant employment effects, while studies using national data find some negative effects for teenagers. We argue that heterogeneity in spatial employment trends generates biased estimates in national analyses and causes overstatement of precision in local and national studies. We propose two new local estimators that compare all contiguous counties or metro areas in the U.S. that straddle a state-based minimum wage gradient. We find that the negative elasticities in national fixed-effects models are generated by unobserved heterogeneities in employment trends. Our local estimators are more robust and show no employment effects.

What you've asserted is not a well-informed claim, as there is a substantial amount of empirical research that demonstrates the precise opposite to be true. For example, consider Addison et al.'s Do minimum wages raise employment? Evidence from the U.S. retail-trade sector:

This paper examines the impact of minimum wages on earnings and employment in selected branches of the retail-trade sector, 1990–2005, using county-level data on employment and a panel regression framework that allows for county-specific trends in sectoral outcomes. We focus on specific subsectors within retail trade that are identified as particularly low-wage. We find little evidence of disemployment effects once we allow for geographic-specific trends. Indeed, in many sectors the evidence points to modest (but robust) positive employment effects.

We can also consider the effects of increased human capital acquisition induced by minimum wage legislation, as observed in Cahuc and Michel's Minimum wage unemployment and growth:

This paper shows that, in an overlapping generations, model with endogenous growth, minimum wage legislation does not necessarily has negative consequences on economic performance. Such legislation can have positive effects on growth by inducing more human capital accumulation. More precisely, a low demand for unskilled labor, induced by a minimum wage, may create an incentive for workers to accumulate human capital. Moreover, it is possible that a decrease in the minimum wage lowers the welfare of each agent in the economy.

Even aside from formal legislation, we can refer to the effects of union activity promoting incentives for human capital acquisition in apprenticeship training and the like through the establishment of minimum wages, which is supported by Dustmann and Schönberg's Training and Union Wages:

This paper investigates whether unions, through imposing wage floors that lead to wage compression, increase on-the-job training. Our analysis focuses on Germany. Based on a model of unions and firm-financed training, we derive empirical implications regarding apprenticeship training intensity, layoffs, wage cuts, and wage compression in unionized and nonunionized firms. We test these implications using firm panel data matched with administrative employee data. We find support for the hypothesis that union recognition, via imposing minimum wages and wage compression, increases training in apprenticeship programs.

For a more direct and straightforward analysis of the minimum wage's ability to provide efficiency benefits (as some do not conceptualize increased employment as increased static efficiency), we could consult Kass and Madden's Holdup in oligopsonistic labour markets - a new role for the minimum wage:

We consider a labour market model of oligopsonistic wage competition and show that there is a holdup problem although workers do not have any bargaining power. When a firm invests more, it pays a higher wage in order to attract workers from competitors. Because workers participate in the returns on investment while only firms bear the costs, investment is inefficiently low. A binding minimum wage can achieve the first-best level of investment, both in the short run for a given number of firms and in the long run when the number of firms is endogenous.

To confirm the aforementioned claim that minimum wages may shift activity to high-wage labor and away from unskilled, low-wage labor (which would also build on our earlier points about human capital acquisition), consider Acemoglu's Good Jobs versus Bad Jobs:

This article develops a model of noncompetitive labor markets in which high‐wage (good) and low‐wage (bad) jobs coexist. Minimum wages and unemployment benefits shift the composition of employment toward high‐wage jobs. Because the composition of jobs in the laissez‐faire equilibrium is inefficiently biased toward low‐wage jobs, these labor market regulations increase average labor productivity and may improve welfare.

Finally, consider Todorovic and Ma's A Review of Minimum Wage Regulation Effect—The Resource-Based View Perspective, which employs meta-analytic techniques to expand beyond the potential deficiencies of single or isolated studies:

The debate around minimum wage regulations, in the aftermath of recent regulatory changes in the United States, continues to grow. This article contributes to present literature by engaging the minimum wage controversy from the resource-based view theoretical perspective. Based on literature review, we find that minimum wage regulations appear to exhibit different impacts in different countries. Using meta-analysis of the related literature, we propose a conceptual framework that highlights the relationship between national resource base and minimum wage regulatory impact. Specifically, we posit that minimum wage impact on a country, such as the United States, is moderated by the national resource base. Further, we identify opportunity cost associated with inadequate minimum wage regulations, as consisting of education, entrepreneurial propensity, and cost divergence. Our conclusions point to the positive effects of the minimum wage controls, including increased education, more productive operating practices, and the emphasis on skill development and high value activities.

So all in all, we actually have rather substantial empirical evidence of the minimum wage's benefits for employment, human capital acquisition, productivity, which constitute efficiency improvements or aids to such. The static orthodox model thus appears rather naive and incomplete in comparison.

 

[tmosley]

Your ignorance of labor economics certainly parallels the profound ignorance of economics in general that I've witnessed you exhibit.



This made me laugh.



As with so many other things, you are the individual here that does not understand. No one disputes the influence of uncontrollable factors in preventing empirical perfection. We are instead convinced by general accuracy, which is confirmed by general consensus among empirical research of superior quality. It's therefore unsurprising that the qualitative analysis in other disciplines confirms the quantitative analysis of economics, such as the agreement between psychology and economics on the association between income and happiness.

As you adhere to Austro-propertarian ideology with the fervor and ignorance of a creationist, I could not expect you to understand. Austrian ideology is to economics as creationism is to evolutionary biology, after all.



Continuing with the actual definition of labor market monopsony, here's reality for you: Consult Dickens et al.'s The Effects of Minimum Wages on Employment: Theory and Evidence from Britain. Consider the abstract:



Note that the heterogenous nature of labor markets allows for negative employment effects in a monopsony model, while the orthodox model does not allow for any broad positive employment effects. More importantly, it's likely that there are additional heterogeneities in employment trends that render many of the analyses you refer to deficient, as evidenced by an empirical source such as Dube, Lester, and Reich's Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties:



What you've asserted is not a well-informed claim, as there is a substantial amount of empirical research that demonstrates the precise opposite to be true. For example, consider Addison et al.'s Do minimum wages raise employment? Evidence from the U.S. retail-trade sector:



We can also consider the effects of increased human capital acquisition induced by minimum wage legislation, as observed in Cahuc and Michel's Minimum wage unemployment and growth:



Even aside from formal legislation, we can refer to the effects of union activity promoting incentives for human capital acquisition in apprenticeship training and the like through the establishment of minimum wages, which is supported by Dustmann and Schönberg's Training and Union Wages:



For a more direct and straightforward analysis of the minimum wage's ability to provide efficiency benefits (as some do not conceptualize increased employment as increased static efficiency), we could consult Kass and Madden's Holdup in oligopsonistic labour markets - a new role for the minimum wage:



To confirm the aforementioned claim that minimum wages may shift activity to high-wage labor and away from unskilled, low-wage labor (which would also build on our earlier points about human capital acquisition), consider Acemoglu's Good Jobs versus Bad Jobs:



Finally, consider Todorovic and Ma's A Review of Minimum Wage Regulation Effect—The Resource-Based View Perspective, which employs meta-analytic techniques to expand beyond the potential deficiencies of single or isolated studies:



So all in all, we actually have rather substantial empirical evidence of the minimum wage's benefits for employment, human capital acquisition, productivity, which constitute efficiency improvements or aids to such. The static orthodox model thus appears rather naive and incomplete in comparison.

Wow, what a petty bump.

 

[Fox McCloud]

Wow, what a petty bump.

yes, by the forums most-frequent posting idiot.

 

[tmosley]

yes, by the forums most-frequent posting idiot.

Eh? 10 posts. Maybe 200 if you include all of his other sock puppets and his spam.