Friday, April 17, 2015

MaCurdy on the minimum wage

Here in Berkeley, CA, there was a Fight for 15 march this past Wednesday, where the 15 is the minimum wage target of interest. Thomas MaCurdy recently wrote an op-ed summary of his hot-off-the-presses JPE paper (link to a helpful Marginal Revolution page) on the minimum wage.

MaCurdy takes at face value the New Minimum Wage literature of the 1990s that found tiny reductions or even increases in employment following minimum wage increases. Rather, his focus is on producers' price setting responses, and he shows that minimum wage increases are "at best a scattershot approach to raising the income of poor families" because minimum wages raise earnings of many workers in many families across the income spectrum, while they raise the prices of goods purchased more typically by low-income families.