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Quotation of the Day…

… is from page 190 of Jeffrey Clemens’s insightful 2024 paper “Minimum Wage Hikes Bring Tradeoffs Beyond Pay and Jobs,” which is chapter 15 in The War on Prices: How Popular Misconceptions About Inflation, Prices, and Value Create Bad Policy (Ryan A. Bourne, ed., 2024) (footnote deleted; link added):

Several recent studies have found evidence that minimum wage increases change hiring patterns, as higher-skilled workers tend to replace lower-skilled workers. A notable study in this vein involved an actual randomized experiment conducted on the Amazon Mechanical Turk marketplace (an online labor market) by the MIT Sloan School of Management economist John Horton. Horton’s study finds strong and clear evidence that higher minimum wage rates lead firms to shift their hiring away from low-productivity workers toward higher-productivity ones.

DBx: To steal an example from my late, great colleague Walter Williams: Suppose that government attempted to help sellers of used cars by imposing a minimum car price of $25,000. The result, of course, would not be that people owning used cars worth only $15,000 or $20,000 would now fetch for each of these vehicles $25,000. The result instead would be that all cars worth less than $25,000 remain unsold, while the demand for higher-end used cars, as well as for new cars, rises. Such legislation would be loved by high-income people seeking to sell their three-year-old BMWs, as well as by new-car dealerships.

One other effect is worth mentioning: Some cars currently worth less than $25,000 would be upgraded by their owners – at, obviously, their owners’ expense – to make these vehicles worth at least $25,000.

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