Home > Journalism and Economics, Microeconomics > Megan McArdle on Minimum Wage Effects

Megan McArdle on Minimum Wage Effects

Lots of good material for discussion in this article, not just about minimum wage effects (see Mankiw, Chapter 6) but perhaps more importantly, about the use and limitations of models in economics (see Mankiw, Chapter 2).

Nor did their study track longer-term impacts on the establishments they did include in their sample. Did more restaurants run into financial trouble over the long run and decide to close down? Did they abandon expansion plans or decide to invest in labor-saving equipment, such as drink stations where customers can fill their own cups rather than having a drink filled by a server? These are the sorts of effects that take years to materialize; if you just stare hard at a short period, you’ll miss them. But if you try to broaden the time period, you run the risk of finding spurious effects that were actually caused by some completely unrelated change in the local laws or economy. The shorter the time period of a study, the more I tend to trust its results — but the less I’m willing to generalize those results to broad statements about the effects of increasing the minimum wage.

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