Drawing in part on research by my colleague Dan Klein and GMU Econ graduate Stewart Dompe, Pierre Lemieux, writing in the current issue of Regulation, explores the reasons for the increasing divide among economists on the policy of a minimum wage. A slice:
The academic debate seems to be turning into arcane econometric disagreements. The more arcane the debate, the less we should be swayed from standard economic theory, according to which the demand curve for labor (like all demand curves) has a negative slope. Perhaps the negative employment effect of minimum wages is smaller than was previously thought, but it is hard to deny that there is an effect.
Also in the current issue of Regulation is David Henderson’s review of Peter Schuck’s Why Government Fails So Much. A slice from David’s review:
Read through welfare economics articles and you can see sharp economists recognizing the various ways that markets can fail. But then, when they get to their government solutions, they write as if the incentives of the government officials trusted to formulate and implement the policies do not matter. That gap in thinking is a huge problem, and Schuck recognizes it.
I’ve yet to read Schuck’s book (although David’s review of it moves it to the top of my to-read list), but I can tell that Schuck is not among those scholars who use the “then a miracle occurs” step in their analyses.