The labor market effects of minimum wage laws: A new perspective |
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Authors: | Richard B McKenzie |
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Institution: | (1) Clemson University, USA |
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Abstract: | Economists almost uniformly argue that minimum wage laws benefit some workers at the expense of other workers. This argument
is implicitly founded on the assumption that money wages are the only form of labor compensation. Based on the more realistic
assumption that labor is paid in many different ways, the analysis of this paper demonstrates that all laborers within a perfectly
competitive labor market are adversely affected by minimum wages. Although employment opportunities are reduced by such laws,
affected labor markets clear. Conventional analysis of the effect of minimum wages on monopsony markets is also upset by the
model developed.
The author is indebted to Rex Cottle, Benjamin Hawkins, Hugh Macaulay, Michael Maloney, Thomas Schaap, Gordon Tullock, Gene
Uselton, and Karen Vaughn for helpful comments on earlier drafts of this paper. |
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Keywords: | |
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