Reason for Increasing the Minimum Wage
Tyler Cowen writes about some research by Dan Klein on reasons why prominent economists support increasing the minimum wage although theory and evidence suggest that it will make some low-income people worse off:
...The results are striking, most of all for how far they stand outside traditional economic reasoning:
Two of those listed by Tyler point to supporting democratic institutions:
...Peter Dorman: Since Tocqueville (at least) there is a well-established argument that greater equality of income and respect is associated with better democratic performance. This is a near-consensus position in political theory.
...Jeffrey Waddoups: Reducing wage inequality will increase the quality of democratic institutions.
I realize it's difficult to measure "quality of democratic institutions," but has this been formally studied before? In any case, I like Tyler's summary:
Bernard Wasow: A low cost demonstration of concern for low wage workers that causes little damage. Elicits a buy-in by low wage workers to the polity
...It is easy to read these and think "Ah, how narrow is neoclassical economics in contrast to these fine thoughts." My response is instead: "These people are making a mountain out of a molehill." Bernard Wasow is the guy who makes the most sense.
I agree. Raising the minimum wage is a low-cost way for politicians to show they care for the downtrodden in society - low-cost to the individual politicians, that is - not to those negatively affected by higher minimum wages.








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