Monday, April 27, 2009

David Card - Labor Economist

Here is a great interview of David Card who is a labor economist at the University of California at Berkeley. Prof. Card talks about labor supply, the minimum wage, unions & strikes, and immigration among other things. One of the things Prof. Card is most famous for is his research on the minimum wage. The minimum wage is the lowest legally allowed wage (with a few possible exceptions) that an employer can pay their employees. In economic theory, this is the same idea as a price floor or wage floor. If the equilibrium labor market wage is less than the legally imposed minimum wage, then there ought to be some unemployment due to higher wages leading to lower levels of employment. Yet Prof. Card has shown that minimum wages have very little effect on employment levels. Click here for an in-depth piece from PBS Newshour but (not with Prof. Card) on the effect of changing the minimum wage in the marketplace.

So the question is: if raising the minimum wage does not have an impact on employment - why?

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