Re: Minimum wage

[Charu datt <charu@ix.netcom.com>]

PJShah wrote:

>  If a
> worker's contribution is of Rs. 10 an hour then it won't make sense to
> hire him or keep him if i have to pay him anything more than Rs. 10/hr.
> If, say, the min wage is Rs. 15/hr, I'll let the workers go whose
> production is not valued at that level.

I think this comes down to how you value a worker's production. How do you
determine the contribution is 10 or 15? It seems to me that there is an
underlying assumption regarding the price of the product. I would argue
that if
human input is needed to make the product then the price needs to reflect
what
it costs to "operate" the human meaning a minimum subsistence wage.

Since you say that arguments against a min wage "well known", I assume
you're
saying these arguments are the consensus of  "respectable" scholarship.
Appended
are a few citations in scholarship that do not support the "well known"
view,
(sent to me by a friend)

-Charu

______________________________________________
Author: Zavodny, Madeline
Title: Why minimum wage hikes may not reduce employment. Abstract: Recent
research has challenged the conventional wisdom among economists that
increases in the minimum wage reduce employment among low-wag e workers.
Although some studies continue to find negative effects, others suggest
that
moderately raising the minimum wage may not reduce employment. The author
of
this article describes and evaluates sever al models that may explain the
controversial recent findings and proposes avenues for future research that
would help determine the validity of these models. The author notes that if
the recent findings that minimum wage increases do not always adversely
affect
employment are correct, economists may need to reconsider their views of
how
labor markets work. In addition, research on other effects of minimum wage
increases is needed. For example, the distributional consequences are
important, particularly if higher-skilled workers displace lower-skilled
workers when the minimum wage is raised. The recent findings challenging
traditional thinking about employment and the minimum wage should be taken
as
the starting point for a larger examination of the effects of the minimum
wage
rather than an end to the debate.
Source: Economic Review (Atlanta, Ga.), v83, n2 (March-April 1998):p18(11)

Author: Machin, Stephen; Manning, Alan
Title: Minimum wages and economic outcomes in Europe.(Papers and
Proceedings of the Eleventh Annual Congress of the European Economic
Association)
Abstract: In this paper we review the arguments and consider evidence on
the
economic effects of minimum wages in Europe. We begin by outlining the
systems
of minimum wages that currently operate in European countries and then
consider some evidence on the economic effects of minimum w ages in four
countries (France, the Netherlands, Spain and the United Kingdom). We
consider
the relation between minimum wage floors and two economic outcomes,
employment
and the distribution of income in working households. We find little
evidence
that minimum wages have a bad effect on jobs and some evidence that they
have
an equalising impact on the distribution of income among families with
someone
in work.
Source: European Economic Review, v41, n3-5 (April 1997): p733(10).

Author: Kuttner, Robert
Title: So much for the minimum-wage scare. (effects of the minimum
wage increases passed by Congress)
Abstract: The minimum wage hike has not resulted in job losses as critics
had
argued would happen. Their flawed theory is that the hike would price
workers
above the value that they can add to the economy. Critics wrongly attribute
recession job losses of 1990-91 to the minimum wage.
Source: Business Week, n3536 (July 21 1997): p19(1)

Author: Evans, Mike
Title: Much ado about nothing: minimum-wage hike will have little
impact.(Column)
Abstract: The furor over the raise in the minimum wage because of the
alleged
economic effects is unwarranted. The increase will affect 800,000 full-time
employees and not lead to widespread unemployment or inflation. Employment
rates are increasing and the increase equals 40% of the average wage.
Source: Industry Week, v245, n17 (Sept 16 1996): p82(1)

Author: Machin, Stephen; Manning, Alan
Title: Employment and the introduction of a minimum wage in Britain.
Abstract:
The implementation of a minimum wage will have minimal effects on
employment
in Britain. Data from British Household Panel Survey and Labour Force
Survey
indicates that minimum wage implementation will not reduce the
concentration
of workers from the lower income households in low paying jobs. However,
the
implementation of an appropriate minimum wage could reduce the income
inequality between genders and improve the well being of a substantial
number
of british workers.
Source: Economic Journal, v106, n436 (May 1996): p667(10)

Author: Greenaway, David
Title: Policy Forum: economic aspects of minimum wages. Abstract: The
minimum
wage has different and numerous economic effects. These are fair earnings
distribution to low paid workers, reduction of earnings differential
between
genders and improvement of employment conditions. However, its distributive
effects depend on the parties involved and effective enforcement of its
implementing mechanisms. While an optimal minimum wage would have a minimal
effect on employment, it would reduce worker turnover who move to high
paying
jobs and improve workers' earnings particularly for women.
Source: Economic Journal, v106, n436 (May 1996): p637(2)



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