Monday, January 16, 2006

Raising the Minimum Wage

The New York times has an excellent feature article on debates around raising the minimum wage in US cities. It's fair and balanced and provides considerable space to employers to voice their concerns (some of which are legitimate) but the salient point – the one relevant to New Zealand debates on the matter – remains: governments can (within reason) raise minimum wages via legislation and this need not lead to higher unemployment.

Why? (IMHO) Because labour markets don’t function in anything near perfect competition.

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