c15 lecture 1: minimum wages and economic outcomes
DESCRIPTION
C15 Lecture 1: Minimum Wages and Economic Outcomes. Stephen Machin, February 2005. Issues. Economic effects of minimum wages and evidence on minimum wages and employment The controversy on ‘conventional wisdom’ versus micro based ‘revisionist’ approach - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/1.jpg)
C15 Lecture 1:Minimum Wages and Economic
Outcomes
Stephen Machin,
February 2005
![Page 2: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/2.jpg)
Issues
• Economic effects of minimum wages and evidence on minimum wages and employment
• The controversy on ‘conventional wisdom’ versus micro based ‘revisionist’ approach
• The introduction of the UK National Minimum Wage
![Page 3: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/3.jpg)
Economic Effects of Minimum Wages
• Effect on employment/unemployment has been central issue in debate about economic effects of minimum wages.
• Standard textbook model of labour demand produces one of the clearest predictions in labour economics - minimum wages price workers out of jobs by forcing employers up their labour demand curve.
![Page 4: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/4.jpg)
Standard Textbook Model
w
wm
w0
Em E0 E
Ls
Ld
![Page 5: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/5.jpg)
Standard Textbook Model
• Basic model rests upon several assumptions: complete coverage; homogeneous labour; competitive labour market; short run and long run impact the same.
• Clear prediction: the minimum wage increase results in reduced employment - the proportional reduction in employment (lnEm - lnE0) equals the proportionate wage increase (lnWm - lnW0) times the elasticity of demand η.
• Can develop more sophisticated models, but with assumption of perfect competition produce same qualitative predictions.
![Page 6: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/6.jpg)
Two Sector Model
• Basic model can be generalised in various directions. One example is to move to a two sector model - covered/non-covered, set E0 = 1, W0 = 1.
• Demand for workers in the covered sector depends on the minimum wage, whereas demand in the uncovered sector depends upon the market wage.
• Minimum wage elasticity of employment = • cηεlnWm / [1 - c + εlnWm] • where c = proportion in covered sector, ε =
elasticity of labour supply.• If c = 1, ε = standard one sector competitive model,
η• Example: c = 0.7, lnWm = 0.6, ε = 0.3, η = -1
employment effect = -0.26.
![Page 7: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/7.jpg)
Implications
• Only pertinent question is ‘how negative is the negative effect on employment?’
• Minimum wage hurts the people it sets out to help by pricing them out of work – even more the case since low skill people more likely to be low paid
![Page 8: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/8.jpg)
Evidence• Early empirical work largely supportive of basic model →
‘conventional wisdom’.• Usually based on aggregate time series studies of US
employment/unemployment rates and minimum wages, usually focussing on teenagers
Yt = g(MWt, X1t,......Xkt) + et
where Yt = employment / unemployment to population ratios (usually in logs), Xit = aggregate demand and supply variables (teenagers in training programmes, school enrollment, time trend), MWt = minimum wage index (e.g. Kaitz index).
• Brown, Gilroy, Kohen (1982) Journal of Economic Literature - say “consensus” reached: minimum wages reduce teenage employment with elasticities in the -0.1 to -0.3 range.
![Page 9: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/9.jpg)
Observations on Time Series Evidence: Re-Appraisal
1). Only up to late 1970s and US minimum wage fell strongly in real terms in the 1980s
4
4.5
5
5.5
6
6.5
7
7.5
Re
al M
inim
um
Wa
ge
(1
99
9 P
rice
s)
1960 1965 1970 1975 1980 1985 1990 1995 2000Year
Real Minimum Wages in 1999$
![Page 10: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/10.jpg)
Re-Appraisal (Continued)
2). Extending the samples of teenage employment studies into the 1980s produces much smaller, often statistically insignificant, elasticities below the ‘consensus’ range (around -0.07) (Card and Krueger, 1995).
![Page 11: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/11.jpg)
Implications of Re-Appraisal
• Minimum wage effects on employment seem small (centring in on zero).
• Alternative theoretical explanations:
Monopsony based arguments:Single buyer of labour (e.g. company town) – characterised by upward sloping labour supply curve to firm
![Page 12: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/12.jpg)
Monopsony
w
wm
w0
EmE0 E
Marginal product of labour
Marginal cost of labour
Ls
![Page 13: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/13.jpg)
Implications of Re-Appraisal
• ‘Dynamic’ monopsony type-notions (based on labour market frictions) can generate non-negative employment effects of minimum wages.
• Or – labour demand curve inelastic so that employment not very sensitive to changes in minimum wages.
![Page 14: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/14.jpg)
Micro Work
• What is best conceptual way to evaluate economic effect of minimum wage?
• ‘Before and after’ micro work more closely approximates the theoretical approaches that talk about labour markets with and without minimum wage floors – sometimes referred to as ‘revisionist’ approach.
![Page 15: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/15.jpg)
Methodological Issues in Newer Research
• Corresponds better to theoretical concepts as adopts before and after approach, with treatment and control groups.
• If E is employment, T and C denote treatment and controls and 1 and 2 are the before and after treatment periods then an estimate of the impact of treatment is:
(ET2 – EC2) – (ET1 – EC1)or
(ET2 – ET1) – (EC2 – EC1)
![Page 16: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/16.jpg)
Micro Based ‘Before and After’ Studies
• Most famous piece is Card and Krueger’s (1994) New Jersey / Pennsylvania comparison
• UK strand 1: Wages Council work
• UK strand 2: evaluations of introduction of UK National Minimum Wage in April 1999
![Page 17: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/17.jpg)
New Jersey/Pennsylvania Comparison
(Card and Krueger, 1994)
• Can be viewed as case study of fast food industry.• Surveyed fast food restaurants in New Jersey and
Pennsylvania in February-March and November-December 1992.
• In April 1992 the New Jersey minimum wage went up from the federal minimum level of $4.25 to $5.05 but the minimum in Pennsylvania remained at $4.25.
![Page 18: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/18.jpg)
New Jersey/Pennsylvania Comparison (Continued)
• Two treatment versus control ‘experiments’:
a) T = New Jersey restaurants, C = Pennsylvania restaurants
b) T = low wage New Jersey restaurants, C = high wage New Jersey restaurants
![Page 19: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/19.jpg)
Survey Descriptive Statistics
![Page 20: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/20.jpg)
New Jersey/Pennsylvania Comparison (Continued)
• Results:
i) Substantial impact on wage structure: February 1992 – 33 percent of NJ and 34 percent of Penn restaurants had starting wage $4.25; November 1992 – 90 percent of NJ restaurants had starting wage $5.05 and 30 percent of Penn restaurants had starting wage $4.25.
ii) But no negative effect on employment (if anything positive)
![Page 21: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/21.jpg)
Wage Structure Impact
![Page 22: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/22.jpg)
Identification of Employment Effects
ΔEi = a + bXi + cNJi + ei
ΔEi = a’ + b’Xi + c’GAPi + e’i
Where GAP = 0 for P stores and NJ stores with W1i ≥ $5.05 and = (5.05 - W1i) / W1i for other NJ stores/
![Page 23: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/23.jpg)
New Jersey/Pennsylvania Comparison (Continued)
![Page 24: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/24.jpg)
Employment Models
![Page 25: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/25.jpg)
UK Wages Councils
• System of minimum wages that used to operate in UK was a partial coverage industry based system.
• Wages councils introduced in 1909 (by Churchill) covered workers in low wage industries (the sweated trades). Abolished in 1993.
• At time of abolition covered around 12 percent of workers in the labour market. Were concentrated in low wage service sector industries. Largest was retail trade.
![Page 26: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/26.jpg)
UK Wages Councils (Continued)
• Dickens, Machin, Manning (1999) look at employment and minimum wages in Wages Council industries from 1975-92.
• Reduced wage inequality, but no evidence of disemployment effects.
![Page 27: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/27.jpg)
Wages Councils: Wage Structure Impacts
![Page 28: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/28.jpg)
Changes in Employment and Toughness
![Page 29: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/29.jpg)
Employment Models
![Page 30: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/30.jpg)
The Introduction of a National Minimum Wage in the UK
• Introduced in April 1999 at £3-60 for over 21s, £3-00 for 18-21s, none for 16-17 year olds.
• Raised (by fairly small amounts) on an irregular basis. Now (after last change of October 2004) stands at £4.85 for the adult rate and £4.10 for the development rate. And, since October 2004, there is a rate for 16-17 year olds, of £3.00 per hour.
![Page 31: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/31.jpg)
Introduction of NMW(Continued)Adult rate Development rate*
April 1999 £3.60 £3.00
June 2000 £3.60 £3.20
October 2000 £3.70 £3.20
October 2001 £4.10 £3.50
October 2002 £4.20 £3.60
October 2003 £4.50 £3.80
October 2004 £4.85 £4.10
Notes: *denotes rate for employees aged 18 to 21 and those aged 22 and over receiving accredited training and in the first six months of employment
![Page 32: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/32.jpg)
Introduction of NMW(Continued)
• Issues:
Who affected and wage benefits.
Evaluating the economic effects.
Initially focus on wage impact, coverage and employment.
![Page 33: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/33.jpg)
Introduction of NMW- Low Pay Commission
• Ex-ante – Low Pay Commission (LPC) set up and reported on evidence and how expect labour market to be affected by NMW
Predicted 2 million workers to benefit (9 percent of workforce), most of whom were women.
Estimated wage boost of 30 percent for those affected
![Page 34: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/34.jpg)
Introduction of NMW – Low Pay Commission (Continued)• Ex-post –
Fewer than 2 million workers benefited, more like 4 or 5 percent (due to measurement error in earnings data).The Office for National Statistics now put the number of people beneath the minimum before introduction at 1.52 million, whilst the most recent Low Pay Commission report goes even lower at 1.3 million. Average wage gain for beneficiaries smaller, more like 6-10 percent
![Page 35: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/35.jpg)
Beneficiaries of Minimum Wage Introduction
![Page 36: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/36.jpg)
Introduction of NMW – Employment Effects
• Key economic question concerns impact on employment.
• LPC stated that their view was that NMW was set at level that would not harm jobs (logic is idea that can have monopsony power up to a certain level of wages so get inverse U-shape in employment effects).
![Page 37: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/37.jpg)
Introduction of NMW - Employment Effects (Continued)1). Macroeconomic picture • No obvious unemployment effect from NMW
introduction.• Aggregate employment rates (%): 1998 – 73.5,
1999 – 73.9, 2000 – 74.4, 2001 – 74.4; Unemployment rates (%): 1998 – 6.3, 1999 – 6.0, 2000 – 5.4, 2001 – 5.1.
(Source: Labour Market Trends, March 2003)
![Page 38: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/38.jpg)
Introduction of NMW- Employment Effects (Continued)2). Micro studies with treatment-control design.• Stewart (2004) looks at individual-level data
sources to appraise the impact of NMW introduction on individual employment probabilities.
• Explicitly looks before and after minimum wage introduction using longitudinal data on people (from Labour Force Survey, British Household Panel Survey and New Earnings Survey).
![Page 39: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/39.jpg)
Introduction of NMW- Employment Effects (Continued)
• Stewart (2004) presents difference-in-difference estimates for four groups: adult men, young men (<22), adult women, young women (<22).
• Also cross-area paper (Stewart, 2002) where uses geographical variation in the proportion affected (across 140 areas) to identify any minimum wage effect.
![Page 40: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/40.jpg)
Introduction of NMW- Employment Effects (Continued)
• Stewart (2004) approach is to compare those workers affected by the minimum wage with workers above the minimum wage floor.
• Looks at differences-in-differences across these groups (again ‘treatment’-’control’ type comparison).
![Page 41: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/41.jpg)
Introduction of NMW- Employment Effects (Continued)
• Step 1 looks at wage effects.
![Page 42: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/42.jpg)
Introduction of NMW- Employment Effects (Continued)
• Step 2 looks at differences in employment probabilities.
![Page 43: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/43.jpg)
Introduction of NMW- Employment Effects (Continued)
• In both papers fails to find negative effects on employment from NMW introduction.
• Across all workers no evidence of an adverse effect on employment resulting from NMW introduction.
![Page 44: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/44.jpg)
Introduction of NMW- Employment Effects (Continued)3). Employment Effects in a Vulnerable Sector –
Care Homes• Machin, Manning and Rahman (2003) look for
minimum wage effects in one of the sectors most vulnerable to employment losses induced by minimum wage introduction, the labour market for care assistants.
• Carried out own survey to collect data on workers and homes before and after minimum wage introduction.
![Page 45: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/45.jpg)
Introduction of NMW- Employment Effects (Continued)
• Why is this a useful research exercise?1). The sector contains many low-wage workers, so the
minimum wage has real potential to have a noticeable important impact on outcomes.
2). The sector is not unionised. 3). It consists of large numbers of small firms (average
employment being somewhere in the range of 15-20 workers) doing a very homogeneous activity in geographically concentrated markets.
4). The product market side of this sector is interesting. An important fraction of the residents of these homes have their care paid for by the Department for Social Security (DSS).
![Page 46: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/46.jpg)
Introduction of NMW- Employment Effects (Continued)• Therefore provides good testing ground for trying
to identify minimum wage effects on employment.• Carried out survey of all UK residential care
homes before and after introduction. Asked for information on all workers in each home.
• Then considered wage and employment effects using methodology that relates changes in wages and employment before and after the minimum wage introduction to the fraction of low paid workers in the pre-minimum wage period.
![Page 47: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/47.jpg)
Introduction of NMW- Employment Effects (Continued)• Impact on Wages
• Approach 1: look at percent below minimum before introduction and for spike at minimum after
• Approach 2: estimate statistical models, relating the change in the average wage before and after minimum wage introduction to the proportion of workers paid less than the minimum wage in the period before introduction.
![Page 48: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/48.jpg)
Introduction of NMW- Employment Effects (Continued)
• Impact on Wages, Approach 1:
![Page 49: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/49.jpg)
Introduction of NMW- Employment Effects (Continued)
• Impact on Wages, Approach 1:
![Page 50: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/50.jpg)
Introduction of NMW- Employment Effects (Continued)
• Impact on Wages, Approach 2:
Estimate home-level wage change models
![Page 51: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/51.jpg)
Introduction of NMW- Employment Effects (Continued)Impact on Employment:
• Study whether homes where wages went up by more experienced employment falls.
• Slight evidence of job losses, but moderate given scale of wage gains.
• Even in this most vulnerable sector hard to find employment losses due to minimum wage introduction.
![Page 52: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/52.jpg)
Introduction of NMW- Employment Effects (Continued)
![Page 53: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/53.jpg)
Distributional Impact
If employment effects moderate then one may be interested in distributional consequences of minimum wage floors:
1) Wage inequality
2) Family income distribution
![Page 54: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/54.jpg)
Wage Inequality
• Dickens-Manning – impact limited further up distribution (small spillovers).
![Page 55: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/55.jpg)
Income Distribution
• Need to be careful what group to study. If households with someone in work:
![Page 56: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/56.jpg)
Current Research
• Moving on from employment effects.
• Particular focus on firm outcomes (like prices, profitability).
• Also work on training, crime impacts.
![Page 57: C15 Lecture 1: Minimum Wages and Economic Outcomes](https://reader034.vdocument.in/reader034/viewer/2022051116/5681580f550346895dc57d45/html5/thumbnails/57.jpg)
Summary
Economics of minimum wages is interesting area to illustrate:
i) How basic first order principles of economics can be evaluated.
ii) How economics can link closely to issues of public policy.
iii) How evidence based policy formation can be useful.