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  1. #10
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    I haven't seen this argument before, it is pretty interesting. Apparently the Council of Economic Advisors floated the idea that the minimum wage might reduce crime, conceivably by improving economic conditions lessening the need for crime. Setting aside just how often that connection has failed to be established historically, it appears that the hypothesis fails because the MW does not, in fact, improve economic conditions. In fact, the opposite is true. The MW worsens economic conditions and increases crime:

    An April 2016 Council of Economic Advisers (CEA) report advocated raising the minimum wage to deter crime. This recommendation rests on the assumption that minimum wage hikes increase the returns to legitimate labor market work while generating minimal adverse employment effects. This study comprehensively assesses the impact of minimum wages on crime using data from the 1998-2016 Uniform Crime Reports (UCR), National Incident-Based Reporting System (NIBRS), and National Longitudinal Study of Youth (NLSY). Our results provide no evidence that minimum wage increases reduce crime. Instead, we find that raising the minimum wage increases property crime arrests among those ages 16-to-24, with an estimated elasticity of 0.2. This result is strongest in counties with over 100,000 residents and persists when we use longitudinal data to isolate workers for whom minimum wages bind. Our estimates suggest that a $15 Federal minimum wage could generate criminal externality costs of nearly $2.4 billion.

    https://www.nber.org/papers/w25647#fromrss




    There was a discussion early in the thread related to the majority of the evidence being in the US. This is largely true because the US has more disparate policies (thus we are able to actually do research) than European or Asian nations. However, an interesting finding out of Denmark (though it relies on the same legal factors and similar methodologies to a study I referenced earlier):

    We estimate the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population. The hourly wage jumps up by 40 percent at the discontinuity. Employment falls by 33 percent and total input of hours decreases by 45 percent, leaving the aggregate wage payment almost unchanged. We show theoretically how the discontinuity may be exploited to evaluate policy changes. The relevant elasticity for evaluating the effect on youth employment of changes in their minimum wage is in the range 0.6-1.1.
    https://www.mitpressjournals.org/doi...rnalCode=rest&
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


 

 

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