Customer Reviews

Minimum Wages

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Minimum Wages brings badly needed clarity to the minimum wage issue. Proponents of minimum wage laws/increases mean well, they want to help the poor. However, straightforward economic theory indicates that minimum wages increase unemployment among low productivity workers, and can decrease the incomes of impoverished households.

Neumark and Wascher have examined the data and there is little evidence that minimum wages laws deliver their intended results. One of the most interesting findings of this book is that minimum wage laws can adversely affect long run wages and earnings. Long run effects often get left out of debates over minimum wages, so their inclusion in this book is important.

Neumark and Wascher have made an important contribution with this book. All those interested in the minimum wage issue should start by reading this book.

Neumark and Wascher present the most comprehensive overview of minimum wage research currently available. The book begins with a theoretical and historical summary of the minimum wage. They then discuss the "old" and "new" minimum wage research. They finish their work with an exploration into periphery topics (like human capital and political economy.) This book does not contain original research. It is a compilation of relevant academic papers over the past 80 years.

The minimum wage is the second most studied aspect of labor economics. The authors compile the 100 most important academic papers on the subject and reveal the results to the reader. They offer relevant graphs and regressions when necessary. When necessary they comment on the validity of particular papers using opposing academic papers. Neumark and Wascher try to make past research accessible to a general audience while still being directed at academics.

The problem with Minimum Wages is the rather obvious bias of the researchers. They have studied the minimum wage for 30 years. About 15 years ago Myth and Measurement seriously questioned their research. Card and Krueger even singled out two of their studies in showing statistical errors. Nuemark and Wascher conceded on some points of interest but never agreed with Card and Krueger's analysis. The entire book feels like one long rebuttal to Myth and Measurement. Nevertheless, the authors do remain fairly objective. They never misinterpret the research of opposing economists (though they do try to quickly refute key points.)

Minimum Wages is an excellent starting point for minimum wage research. However, I would suggest reading Myth and Measurement first.