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dspeyer comments on A potentially great improvement to minimum wage laws to handle both economic efficiency as well as poverty concerns - Less Wrong
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Comments (74)
That is indeed what economic theory predicts. Treating a theoretical prediction as a fact is generally a mistake, except with extremely well-tested theories (physics at Newtonian scales with a small number of objects is the only example I can think of). This is particularly true of economics, which shows worrisome heuristics as a field and especially true of the minimum wage / unemployment link which has been specifically looked for and not found
Moreover, economics doesn't have a lot to say about the magnitude of these effects. My understanding of the issue is that minimum wage laws seem to have small employment effects (not sure about the sign) and also small welfare effects for poor people. In other words, whether it's a good idea or a bad idea, it's not something worth paying lots of attention to.