Monopsony and the Minimum Wage

[Leviathan]

Are you thinking I'm Aguilar again? Don't you remember that he thought I was you?

 

[tmosley]

Sorry. 99 out of 100 times, when someone comes out of the blue to attack Kaju, it's Shaka. This has happened several times since this thread was made.

Why did you feel the need to come back months later to respond? You obviously have nothing invested here. I would suggest you go elsewhere.

 

[Leviathan]

Recent acquisition of free time.

Kaju's an idiot. I'm happy to have an extended debate with him and his comrades from mises.org if they can handle it, but one mod there banned me, and banned another account even though I was out-debating their regulars on this very topic, with that very content posted.

And of course, I was banned from here because LibertyEagle didn't like me "promoting communism," another indication of an intolerance for free dialogue.

Whatever.

 

[Fox McCloud]

Are you thinking I'm Aguilar again? Don't you remember that he thought I was you?

I'm relatively unconvinced, and not even an IP listing would be able to change that, given Anguilar's past statements and actions.

Kaju's an idiot. I'm happy to have an extended debate with him and his comrades from mises.org if they can handle it, but one mod there banned me, and banned another account even though I was out-debating their regulars on this very topic, with that very content posted.

why don't you let us be the judge of that and provide your username on the MIses.org site.

 

[Leviathan]

I'm relatively unconvinced, and not even an IP listing would be able to change that, given Anguilar's past statements and actions.

Really? Well, apart from my anti-capitalism and lack of promotion of "axiomatic economics," perhaps this will help you.

why don't you let us be the judge of that and provide your username on the MIses.org site.

Agnapostate

Leviathan

Same pattern occurred here.

 

[krazy kaju]

Pompous idiocy.

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.

And again you miss the point. How can data tell you anything if you can't distinguish between correlation and causation?

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.

I know, this is pretty standard stuff.

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.

Empirical evidence cannot validate or invalidate a logically sound argument. Saying that "such and such" study showed that "so-and-so" happened after some law was enacted cannot prove a damn thing, since it is impossible to control for other factors. What if increased profitability allowed for firms to increase wages? What if leisure preferences changed and individuals withdrew from the labor market, driving wages upwards and unemployment downwards (as formerly unemployed individuals would become employed as the retirees left the labor market)? What if there was migration which shrunk the number of unemployed? What if the economy boomed for whatever reason and wages would have increased naturally?

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.

1. Employment - Again, there are too many variables to control for. Also, what these studies can't show, is whether or not firms would have employed more or less unskilled labor had the minimum wage been lower.
2. Human Capital Acquisition - Forcing people to go to college by taking away employment opportunities seems like an excellent way to increase household debt, increase the cost of higher education, and decrease total utility.
3. Productivity - Claiming that raising the minimum wage promotes apprenticeship programs is rather silly. Apprentices and workers who receive on-the-job training are unskilled labor. As such, increases in the minimum wage can only diminish the amount of paid apprenticeships there can be.
4. At best, you have managed to post extracts of studies, not actual studies themselves. This provides little evidence for your argument.
5. You also haven't attacked my key argument - that in the presence of a monopsony, increased profits would lead to increased investment which would lead to increased long-term economic growth, which in turn would lead to greater increases in the standard of living in the future.
6. A secondary argument of mine is that the market has a natural floor for wages. See Ricardo's "iron law of wages."
7. Also see this for a summary of a lot of the research done on the minimum wage:
Summary of Research on the Minimum Wage

* The minimum wage reduces employment.

Currie and Fallick (1993), Gallasch (1975), Gardner (1981), Peterson (1957), Peterson and Stewart (1969).

* The minimum wage reduces employment more among teenagers than adults.

Adie (1973); Brown, Gilroy and Kohen (1981a, 1981b); Fleisher (1981); Hammermesh (1982); Meyer and Wise (1981, 1983a); Minimum Wage Study Commission (1981); Neumark and Wascher (1992); Ragan (1977); Vandenbrink (1987); Welch (1974, 1978); Welch and Cunningham (1978).

* The minimum wage reduces employment most among black teenage males.

Al-Salam, Quester, and Welch (1981), Iden (1980), Mincer (1976), Moore (1971), Ragan (1977), Williams (1977a, 1977b).

* The minimum wage helped South African whites at the expense of blacks.

Bauer (1959).

* The minimum wage hurts blacks generally.

Behrman, Sickles and Taubman (1983); Linneman (1982).

* The minimum wage hurts the unskilled.

Krumm (1981).

* The minimum wage hurts low wage workers.

Brozen (1962), Cox and Oaxaca (1986), Gordon (1981).

* The minimum wage hurts low wage workers particularly during cyclical downturns.

Kosters and Welch (1972), Welch (1974).

* The minimum wage increases job turnover.

Hall (1982).

* The minimum wage reduces average earnings of young workers.

Meyer and Wise (1983b).

* The minimum wage drives workers into uncovered jobs, thus lowering wages in those sectors.

Brozen (1962), Tauchen (1981), Welch (1974).

* The minimum wage reduces employment in low-wage industries, such as retailing.

Cotterman (1981), Douty (1960), Fleisher (1981), Hammermesh (1981), Peterson (1981).

* The minimum wage hurts small businesses generally.

Kaun (1965).

* The minimum wage causes employers to cut back on training.

Hashimoto (1981, 1982), Leighton and Mincer (1981), Ragan (1981).

* The minimum wage has long-term effects on skills and lifetime earnings.

Brozen (1969), Feldstein (1973).

* The minimum wage leads employers to cut back on fringe benefits.

McKenzie (1980), Wessels (1980).

* The minimum wage encourages employers to install labor-saving devices.

Trapani and Moroney (1981).

* The minimum wage hurts low-wage regions, such as the South and rural areas.

Colberg (1960, 1981), Krumm (1981).

* The minimum wage increases the number of people on welfare.

Brandon (1995), Leffler (1978).

* The minimum wage hurts the poor generally.

Stigler (1946).

* The minimum wage does little to reduce poverty.

Bonilla (1992), Brown (1988), Johnson and Browning (1983), Kohen and Gilroy (1981), Parsons (1980), Smith and Vavrichek (1987).

* The minimum wage helps upper income families.

Bell (1981), Datcher and Loury (1981), Johnson and Browning (1981), Kohen and Gilroy (1981).

* The minimum wage helps unions.

Linneman (1982), Cox and Oaxaca (1982).
* The minimum wage lowers the capital stock.

McCulloch (1981).

* The minimum wage increases inflationary pressure.

Adams (1987), Brozen (1966), Gramlich (1976), Grossman (1983).

* The minimum wage increases teenage crime rates.

Hashimoto (1987), Phillips (1981).

* The minimum wage encourages employers to hire illegal aliens.

Beranek (1982).

* Few workers are permanently stuck at the minimum wage.

Brozen (1969), Smith and Vavrichek (1992).

* The minimum wage has had a massive impact on unemployment in Puerto Rico.

Freeman and Freeman (1991), Rottenberg (1981b).

* The minimum wage has reduced employment in foreign countries.

Canada: Forrest (1982); Chile: Corbo (1981); Costa Rica: Gregory (1981); France: Rosa (1981).

 

[krazy kaju]

So 50 years of empirical research (with a few minor exceptions) backs up the standard theoretical view of price floors.