Terra McKinnish’s new paper finds evidence that minimum wages do indeed destroy jobs on net for low-skilled workers – and, it appears, also evidence against the assertion that low-skilled workers in America are generally victims of monopsony power. (HT Frank Stephenson) Here’s the abstract:
The 2009 federal minimum wage increase, which compressed cross-state differences in the minimum wage, is used to investigate the claim that low-wage workers are attracted to commute out of state to neighboring states that have higher minimum wages. The analysis focuses on Public Use Microdata Areas (PUMAs) that experience commuting flows with one or more neighboring state. A difference-in-differences-in-differences model compares PUMAs that experienced a sizeable increase or decrease in their cross-border minimum wage differential to those that experience smaller change in the cross-border differential. Out-of-state commuting of low wage workers (less than 10 dollars an hour) is then compared to that of moderate wage workers (10–13 dollars an hour). The results suggest that an increase in own state’s minimum wage, relative to neighbor’s, increases the frequency with which low-wage workers commute out of the state. The analysis is replicated on the subset of PUMAs that experience commuting flows with more than one neighboring state, so that the estimates are identified entirely within PUMA. As a whole, the results suggest that low-wage workers tend to commute away from minimum wage increases rather than towards them.
Mark Perry exposes the folly of Trump’s lumber tariffs. A slice:
If Canada “unfairly” subsidizes its lumber producers, that’s a form of foreign aid, and a gift from the citizens of Canada to the citizens of the United States. If we wouldn’t complain about free lumber from Canada, we shouldn’t complain about low lumber prices that might be subsidized by Canadian citizens.
(Be careful not to read Mark’s post as suggesting that protectionism destroys jobs on net in the domestic economy. Protectionism doesn’t destroy jobs on net in the domestic economy. Rather, protectionism – “scarcityism” – protects worse jobs in the domestic economy and prevents the creation of better jobs in the domestic economy.)
Richard Ebeling explains the morality of capitalism.
Bob Murphy flags an inconsistency in “Progressive” thought.
Arnold Kling is deeply insightful.
My GMU Econ colleague Mark Koyama offers some economic history of east Asia. (HT Tyler Cowen)
Vernon Smith champions Americans’ First-amendment rights.
