The canonical example of this is minimum wage laws. There is a lot of economic theory about how (reasonable-level) minimum wages create unemployment. And many people continue to insist that this is in fact the case, based on pretty solid supply/demand reasoning.
But in most circumstances, big empirical studies persistently fail to show any evidence that the predicted unemployment actually occurs. Why? I can tell some just-so stories about it, but the real answer I think is “geez, I don’t know, real life is much more complex than simple supply/demand models.”
Research on this seems to go back and forth, but my understanding of the latest was that it’s just hard to measure but at a high level the evidence largely points in the way theory predicts (minimum wages reduce employment). https://www.nber.org/papers/w28388
Related to the original post, this is why I think the Earned Income Tax Credit is good while a minimum wage is bad.
No I didn’t estimate the effect myself. I don’t think that’s a reasonable bar for commenting in this context. I also doubt it would make a difference if I had, since as a non-expert, my opinion of any given study’s methods is probably not going to convince anyone.
Admittedly I have not. TBH I’m not sure i could tell even if I did. But I’m very confident just by looking at the world around me that predictions by minwage opponents of imminent mass unemployment every time it’s raised are wrong.
What I also know is that the ultimate effect is controversial among respected economists. What I deduce from this is that if there’s an effect it must be small, because if it was big it would be obvious.
The canonical example of this is minimum wage laws. There is a lot of economic theory about how (reasonable-level) minimum wages create unemployment. And many people continue to insist that this is in fact the case, based on pretty solid supply/demand reasoning.
But in most circumstances, big empirical studies persistently fail to show any evidence that the predicted unemployment actually occurs. Why? I can tell some just-so stories about it, but the real answer I think is “geez, I don’t know, real life is much more complex than simple supply/demand models.”
Research on this seems to go back and forth, but my understanding of the latest was that it’s just hard to measure but at a high level the evidence largely points in the way theory predicts (minimum wages reduce employment). https://www.nber.org/papers/w28388
Related to the original post, this is why I think the Earned Income Tax Credit is good while a minimum wage is bad.
Have you read through the studies and methods yourself and checked that they estimate the effects correctly?
Why did you decide that this isolated demand for rigor belongs on my comment and not the parent, or dozens of other comments?
I posted it on the parent comment too. Is there some reason you find it more difficult to answer my question than the parent commenter does?
No I didn’t estimate the effect myself. I don’t think that’s a reasonable bar for commenting in this context. I also doubt it would make a difference if I had, since as a non-expert, my opinion of any given study’s methods is probably not going to convince anyone.
I tend to think social science is untrustworthy, so if you haven’t double-checked their methods yourself you should probably assume they are wrong.
But would you trust the methods if I had checked, or would you still want to check it yourself?
If you had checked, that would be a filter, which would make it more worth paying attention to and maybe checking myself.
Thanks, that’s a good example. I’ll think about it.
Have you read through the studies and methods yourself and checked that they estimate the effects correctly?
Admittedly I have not. TBH I’m not sure i could tell even if I did. But I’m very confident just by looking at the world around me that predictions by minwage opponents of imminent mass unemployment every time it’s raised are wrong.
What I also know is that the ultimate effect is controversial among respected economists. What I deduce from this is that if there’s an effect it must be small, because if it was big it would be obvious.