Do Minimum Wage Laws Help the Poor, Overall?

business_ethics_highlights_2Big economic questions like that are too complex, and too important, to guess at. If you think it seems obvious that raising the minimum wage will reduce poverty, think again. >>>

How effective is the minimum wage at supporting the poor? (Marginal Revolution)

The highly esteemed and extremely proficient Thomas MaCurdy has a new piece in the JPE (jstor) on exactly that question. The news does not surprise me:
This study investigated the antipoverty efficacy of minimum wage policies. Proponents of these policies contend that employment impacts are negligible and suggest that consumers pay for higher labor costs through imperceptible increases in goods prices. Adopting this empirical scenario, the analysis demonstrates that an increase in the national minimum wage produces a value-added tax effect on consumer prices that is more regressive than a typical state sales tax and allocates benefits as higher earnings nearly evenly across the income distribution. These income-transfer outcomes sharply contradict portraying an increase in the minimum wage as an antipoverty initiative.
– See more at: http://marginalrevolution.com/marginalrevolution/2015/03/how-effective-is-the-minimum-wage-at-supporting-the-poor.html#sthash.vmXFBn1K.dpuf….


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