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  • Originally posted by gribbler View Post
    Deadweight loss is not simply a product of tax rate but also elasticities. With a land value tax up to a certain point there is no relationship between square of the tax rate and deadweight loss.
    Yes, yes you are pushing into econ 102 territory, but it would be a divine coincidence (technical term) if the ideal revenue source for the welfare state just happened to be a tax on the wages of its beneficiaries, levied in exact correspondence to the welfare received. There is also no reason to believe that the price elasticity of demand for the relevant labor is any different from the same elasticity for other labor.

    Demand for labor affected by minimum wage is inelastic.
    Nope. Very much no. Empirically and theoretically no.

    Comment


    • Originally posted by Kuciwalker View Post
      Yes, yes you are pushing into econ 102 territory, but it would be a divine coincidence (technical term) if the ideal revenue source for the welfare state just happened to be a tax on the wages of its beneficiaries, levied in exact correspondence to the welfare received. There is also no reason to believe that the price elasticity of demand for the relevant labor is any different from the same elasticity for other labor.
      It would be a miracle if we had an ideal system for wealth redistribution. You don't seem to be too thrilled about the way transfer payments work in the US. I guess your rhetorical strategy is to dismiss the minimum wage as not ideal and then complain about how transfer payments are discouraging work and try to roll them back?

      Nope. Very much no. Empirically and theoretically no.
      If it's not inelastic then the minimum wage is obviously too high or a bad idea.

      Comment


      • gribbler is presumably going to present an argument along the lines of "you need at least N minimum-wage employees to run your McDonalds, so raising their wages isn't going to cause unemployment".

        Problems with this model:

        1. We do observe substitution of capital for labor in retail all the time (e.g. automated checkout lines). We also observe substitution of above-min-wage labor for min-wage labor.
        2. If this were true, it would amount to a special tax on certain types of capital investments (those that are complementary to minimum-wage labor), which has a very definitely nonzero elasticity.
        3. For workers who aren't paired with much complementary capital (a guy who goes around mowing lawns), there's no reason to believe the price elasticity of of demand is different than for any other service.
        Last edited by Kuciwalker; December 12, 2012, 17:45.

        Comment


        • Originally posted by gribbler View Post
          It would be a miracle if we had an ideal system for wealth redistribution.
          As I said, "divine coincidence" is a technical term. In this context, it means that the region of the parameter space where it is true has measure approaching zero (i.e. you can construct a model where it is true, but only by fine-tuning the parameters to get the answer you want). IOW, it is almost certainly false.

          You don't seem to be too thrilled about the way transfer payments work in the US. I guess your rhetorical strategy is to dismiss the minimum wage as not ideal and then complain about how transfer payments are discouraging work and try to roll them back?
          Transfer payments discourage work through the income effect and, if they are poorly-designed, through the imposition of high effective MTRs. The former is optimal for social welfare and is actually a plus; the latter is just stupid policy.

          If it's not inelastic then the minimum wage is obviously too high or a bad idea.
          Well guess what, the minimum wage IS too high and a bad idea!

          But remember we're not just talking about the minimum wage - we are also talking about the above-market wages imposed by unions, and other policies that create wage floors (e.g. you have to give your employees such-and-such a benefit).

          Comment


          • Originally posted by Kuciwalker View Post
            gribbler is presumably going to present an argument along the lines of "you need at least N minimum-wage employees to run your McDonalds, so raising their wages isn't going to cause unemployment".

            Problems with this model:

            1. We do observe substitution of capital for labor in retail all the time (e.g. automated checkout lines). We also observe substitution of above-min-wage labor for min-wage labor.
            2. If this were true, it would amount to a special tax on certain types of capital investments (those that are complementary to minimum-wage labor), which has a very definitely nonzero elasticity.
            3. For workers who aren't paired with much complementary capital (a guy who goes around mowing lawns), there's no reason to believe the price elasticity of of demand is different than for any other service.
            Or efficiency wage effects can absorb a large part of the cost of paying them more. Paying higher wages is not the most profitable way to run a McDonalds, but the advantages of paying people next to nothing aren't that big.

            Comment


            • Efficiency wage theory predicts that employers will pay above-market wages anyway without government intervention. It is in no way an argument for the minimum wage.

              Comment


              • Originally posted by Kuciwalker View Post
                Efficiency wage theory predicts that employers will pay above-market wages anyway without government intervention. It is in no way an argument for the minimum wage.
                It only predicts that if the gains from efficiency wages are sufficiently large to make it more profitable to pay higher wages. If the gains are significant but not enough to fully pay for the higher wages, employers won't raise wages voluntarily, but the employment losses of being forced to raise wages would be reduced by the efficiency wage effects. And the cost of supervising McDonald's workers, relative to what they're getting paid, is probably relatively higher than the cost of supervising someone who earns a much higher wage so that would make McDonald's employment relatively inelastic.

                Comment


                • Originally posted by Krill View Post
                  More to do with Whistleblowing aspect: At Will employment is obviously reasonable in multiple circumstances but to be fired (and potentially ****listed) for informing on illegal practices is counter productive for society. I understand that At Will doctrine varies between states, but still...
                  Naturally, the worst of those states are red states in the deep south. There was only so much culture, literacy and common sense our ancestors in the Old Dominion could impart to our dimmer, but still beloved, brethren.
                  When all else fails, blame brown people. | Hire a teen, while they still know it all. | Trump-Palin 2016. "You're fired." "I quit."

                  Comment


                  • Originally posted by gribbler View Post
                    It only predicts that if the gains from efficiency wages are sufficiently large to make it more profitable to pay higher wages. If the gains are significant but not enough to fully pay for the higher wages, employers won't raise wages voluntarily, but the employment losses of being forced to raise wages would be reduced by the efficiency wage effects.
                    Your model is incoherent. The efficiency wage hypothesis predicts that the private (to the employer) returns to the higher wages is greater than or equal to the actual wage costs. If they weren't than the employer wouldn't be paying those wages.

                    This whole thing is a massive distraction; efficiency wage theory is very much not an argument for the minimum wage.

                    And the cost of supervising McDonald's workers, relative to what they're getting paid, is probably relatively higher than the cost of supervising someone who earns a much higher wage so that would make McDonald's employment relatively inelastic.
                    No, that makes McDonald's employment MORE elastic. You are suggesting that they can cheaply substitute above-min-wage labor for min-wage labor because the former costs less to supervise. The people who are employable at the (former) minimum wage but not at the higher wage are the ones who lose out.

                    Comment


                    • gribbler, the only coherent story you're going to get that justifies the minimum wage is a monopsony employer story - and there are no more monopsony employers.

                      Comment


                      • Originally posted by MichaeltheGreat View Post
                        Naturally, the worst of those states are red states in the deep south. There was only so much culture, literacy and common sense our ancestors in the Old Dominion could impart to our dimmer, but still beloved, brethren.
                        The Old Dominion is Virginia, *******
                        If there is no sound in space, how come you can hear the lasers?
                        ){ :|:& };:

                        Comment


                        • Originally posted by MichaeltheGreat View Post
                          Naturally, the worst of those states are red states in the deep south. There was only so much culture, literacy and common sense our ancestors in the Old Dominion could impart to our dimmer, but still beloved, brethren.
                          Or rather, only so much they could understand.
                          You just wasted six ... no, seven ... seconds of your life reading this sentence.

                          Comment


                          • Originally posted by MrFun View Post
                            How do you get marketable skills if you don't get hired because you don't have previous experience?

                            How do you get marketable skills if you can't afford college, and don't want to pile up student loan debt?
                            You start at the bottom. Then instead of blowing your paycheck on beer and cigarettes, you do things like look for trade or vocational training programs, community college, self-teaching, and meanwhile, at your suck-ass bottom end job, you show talent and ambition and look for something better. You spend your time at the library. You work a second or third suck-ass job if you need to save money for your edumacation. I went to college without a dime of scholarship money or student loans. Above all else, you show drive and initiative and don't expect anything to be handed to you, because although it might be, you're best off relying on what you can control.
                            When all else fails, blame brown people. | Hire a teen, while they still know it all. | Trump-Palin 2016. "You're fired." "I quit."

                            Comment


                            • Originally posted by Kuciwalker View Post
                              gribbler, the only coherent story you're going to get that justifies the minimum wage is a monopsony employer story - and there are no more monopsony employers.
                              It exists in healthcare in other western countries.
                              You just wasted six ... no, seven ... seconds of your life reading this sentence.

                              Comment


                              • Originally posted by Hauldren Collider View Post
                                The Old Dominion is Virginia, *******
                                Which is (a) not in the deep south, (b) my ancestors started arriving there in the 1630s, (c) when they moved to the Kentucky border, it was still on the maps as Virginia because they were the first explorers and settlers on that particular frontier, just after the War for Independence. Oh, and (d), compared to the folks who settled in the Palmetto state and other environs, Virginia was the epitome of culture, education, sophistication and all-around southern greatness compared to the backwaters occupied by our lesser-witted kin.
                                When all else fails, blame brown people. | Hire a teen, while they still know it all. | Trump-Palin 2016. "You're fired." "I quit."

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