… is from a conversation that I had on Tuesday in my office with my always-wise and insightful colleague Bryan Caplan:
Me: In the undergraduate labor-economics course that you teach, Bryan, do you cover Alan Manning’s theory of ‘dynamic monopsony’ and explain how it can justify the minimum wage?
Bryan: No. In an undergraduate class I cover only topics that are relevant in the real world. That theory [of so-called ‘dynamic’ monopsony power] obviously doesn’t describe the real-world market for low-skilled workers in the U.S.
Bryan and I went on to agree that, while there aren’t many upsides to being a low-skilled worker, one upside is that your skills aren’t highly specialized – and, so, you are quite flexible in moving from job to job. (By the way, another upside – at least for many people – of being a low-skilled worker is that you are probably very young. So you have most of your life still ahead of you. If you are fortunate enough not to be priced out of work by the minimum wage, you will gain skills that will soon have you earning more than the minimum wage.)
(I thank Bryan for his kind permission to share here this part of our conversation.)
I remind readers again of the labor-economist Don Bellante’s superb 2007 article, “The Non Sequitur in the Revival of Monopsony Theory.”