Saturday, April 5, 2014

Not shaping up to be Menzie's day

In addition to all the evidence that 1946 was a booming good time to live and work in the USA, Menzie Chinn's other denialist trope suffers this blow from Joseph Sabia of San Diego State University;
In a 2014 study, I examined Census data from 1990 to 2010 to explore whether the low-skilled employment effects of minimum wage increases differ in peaks and troughs of state business cycles.11 The results showed that during economic downturns—periods of high unemployment or low nominal GDP growth—the adverse employment effect of minimum wage increases for younger high school dropouts is larger than in times of expansion. Specifically, I found that during state expansions, a 10 percent increase in the minimum wage reduces employment of younger high school dropouts by about 2 percent. However, during recessions, the effect is twice as large—a 10 percent increase in the minimum wage reduces low-skilled employment by 4 percent. This study suggests that if the proposed [by Barack Obama] 39 percent federal minimum wage increase [to $10.10/hr] were implemented, and a state were in a period of high unemployment or sluggish growth, there could be a nearly 16 percent decline in employment for vulnerable low-skilled workers.
Mr. Sabia also goes on to show why most of the 'studies' purporting to find no disemployment effects from higher minimum wage laws are...rubbish.

Which the interested, and objective, reader can see for him/her self.

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