Makes sense to me.
I had a pre-programmed blog post on the issue of the minimum wage and poverty which was preempted by Mark Koyama (a blogger here at Notes on Liberty). The tweet is below and it has forced me to adjust the post.
An important & often neglected point. Minimum wage is s bad anti-poverty tool even if employment effects are zero https://t.co/lVEqwEhglz
— Mark Koyama (@MarkKoyama) 3 janvier 2017
Mark is absolutely right! Let me explain why with my own spin on it.
First of all, the demand curve slopes downwards – always. However, the method of adjusting to price changes (wages are a price and the minimum wage is a price control) is not an empirical constant. I am unlikely to fire workers for a 1% in the inflation-adjusted minimum wage. Firing workers implies transaction costs that are dependent of context (for example, if I am friend with my employee…
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