THE POLITICAL ECONOMY OF MINIMUM WAGE LEGISLATION

Two questions are addressed in this paper. (A) Why do labor unions and certain employer organizations respectively promote and impede minimum wage legislation? (B) Do these groups have significant impacts on minimum wages? Question (A) is examined in the context of models that identify the economic self-interest of unionized skilled workers and capitalists in legal wage floors. Question (B) is approached by a median legislator utility maximization model that leads to Tobit estimation of the relationship between state minimum wage rates and measures of statewide organized labor and capital and average hourly earnings.     

PARETO IMPROVING MINIMUM WAGE LAWS

By increasing the expected wage in low skill jobs, a minimum wage law can reduce the incentive for low skill workers to imitate high skill workers in the signalling process. The gain from reduced investment in the signal can more than offset the loss from unemployment among low skill workers so that total output increases. Moreover, with an appropriate poll tax on workers to compensate owners of capital, the law can make all workers and owners of capital better off.     

MINIMUM WAGE EFFECTS WITH OUTPUT STABILIZATION

What are the effects of legal minimum wage rates on the U.S. economy? Does minimum wage legislation promote the economic self-interest of high wage union labor and impede the economic self-interest of capitalists as our earlier research [Cox and Oaxaca 1982] suggested? This paper uses a nine sector econometric/simulation model of U.S. industry from 1975–1978 to answer these questions in the context of stabilization policies which hold aggregate real output constant. While most simulated percentage effects are small, those for the unskilled workers themselves are not. A 15.7 percent increase in the average nominal wage rate of unskilled labor, as a result of minimum wage legislation, produced an 11 percent decrease in unskilled employment, 2.2 million jobs lost, while increasing the real wage of unskilled workers by 15 percent. Simulated changes in several key variables support our earlier observations that the self-interests of labor unions, with skilled workers, conflict with those of capitalists over the issue of minimum wage legislation.     

JOB SIGNALLING and WELFARE IMPROVING MINIMUM WAGE LAWS

Job market signalling (via education) models assume workers know their marginal productivities before accepting jobs, but employers do not. Yet modern theories of the firm predict positive cross partial derivatives among factors. Factor owners thus cannot know their marginal products before interacting with others. Any empirical claim that education is being used for socially wasteful signalling is therefore suspect. Exceptional but underpaid workers can in any case shirk down to the common level instead of obtaining education. The recent finding that minimum wage laws could curb wasteful signalling might thus be a solution in search of a problem.     

EMPLOYMENT EFFECTS OF TWO NORTHWEST MINIMUM WAGE INITIATIVES

This article exploits a natural experiment initiated by Oregon and Washington voter referendums to show that the minimum wage is a blunt instrument that differentially affects low-wage workers within and across industries. Specifically, employment growth specifications indicate that the minimum wage generates consistently negative employment effects for eating and drinking workers where the minimum is shown to be relatively binding, but not for hotel and lodging workers where the minimum is less binding. Regressions using job-specific want-ad data from Portland and Seattle newspapers also indicate a reduction in hiring solicitation relating to the extent that the minimum wage binds. ( JEL J31, J38)     

THE CALCULUS OF VOTING RECONSIDERED

A rational economic hypothesis of the citizen's decision tovote or not vote in U. S. presidential elections has been citedas an example of the replacement of social-psychologically oriented"empirical generalizations" by axiomatically based deductivepropositions in political science. However, close scrutiny showsthat the rational (or political) economic paradigm is no moreaccurate a theory than previously popular systems analysis orfunctional paradigms. The claimed verification of the originalhypothesis was based on an apparently imprecise, adhoc, ordinalprocedure that could not distinguish between the intimatelyrelated rational economic and social-psychological hypotheses.A more powerful technique resolves the issue in favor of thelatter model for the data used by the original authors.     

THE "PSYCHOSOMATIC FAMILY" RECONSIDERED: DIABETES IN CONTEXT

Minuchin, Rosman and Baker's (1978) Psychosomatic Families is widely cited as a demonstration that the physiological disturbance of some diabetic patients serves a function in their families. We found that the original data did not provide such a demonstration. We examined the psychosomatic family model in light of recent developments in the study and treatment of diabetes. We concluded that the model decontextualizes the family and assigns to it characteristics that are more appropriately seen as reflections of the disease process, the family coping tasks this entails, and the nature of the family's relationship with the health care system. The need for new open-systems models of the family's role in diabetes is discussed .     

ORIENTALISM RECONSIDERED: ISRAELI MEDIA AND THE ARTICULATION OF RESISTANCE

Questions of the relation between race and nationality are at the centre of Israel' defence narrative and its violence, its deployment of blood and domination of land and bodies. Usually, the discourse of violence in a nation' logic involves images of penetration to borders and land. However, this essay is about internal violence, about the reproduction of the state not through land, but through bodies, and babies, narratives and memory, knowledge and censorship. To understand this case is to reconsider questions of how Orientalism, as a practice of knowledge and of violence works. The author revisits the concept of Orientalism thereby relocating the different ways in which it internally works within the Israeli nation state. To illustrate her claim, she finds it useful to locate parallel features in the discourse of the Gulf War and the image of Saddam Hussein, created by Western media, and the discourse of the kidnapped Yemenite babies scandal and the image of Rabbi Uzi Meshulam, created by Israeli media. Both cases involve questions of violence, resistance and Western domination. In the author' analysis, she focuses on the complexity in which Orientalism functions when the state demarcates people and identities rather then land and borders. It will be shown how concepts of violence, race and nationalism are reproduced through the media discourse of the kidnapped Yemenite babies at the junction of social conflict and resistance. A sample of newspaper reports on the Yemenite babies affair during the resistance of Rabbi Meshulam are examined, known in Israel as the ‘The Fortification in Yahud’. The author' analysis is also based on her experience as an investigative reporter covering the Yemenite babies affair, and first hand observation of the resistance of Rabbi Meshulam.¹     

PRESSURE GROUPS AND PUBLIC EXPENDITURES: THE FLYPAPER EFFECT RECONSIDERED

A model of government budgeting is developed in which lobbying by interest groups can divert the allocation of funds away from the one preferred by the median voter. The model is applied to state and local governments to show that the "flypaper effect"–the tendency for lump-sum grants to increase public expenditures by more than an equivalent increase in the community's pretax income–can be explained without the customary assumption of voter fiscal illusion. Furthermore, the model predicts variation in the extent of the flypaper effect among expenditure categories, as found in previous empirical studies.