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realisticidealist
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« on: October 23, 2018, 10:53:07 AM » |
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Well, the canonical Econ 101 answer is that you really can't. Even if you implement the minimum wage, induce a labor surplus, and boost labor demand to match, you'd still be boosting aggregate demand which increases the overall price level, unless you can shift both the short and long run aggregate supply curves outward (which is really difficult to do intentionally). In that case, the answer simply devolves to: boost economic growth. Of course, boosting economic growth by itself without a minimum wage hike might do as much or more good for the effected workers than growth with a minimum wage hike.
The more complicated Econ 301 answer is that firms act intertemporally and based on heuristic decision making. Small minimum wage increases may not be salient to most businesses, but large increases certainly are. Minimum wage increases tend to impact future hiring over current employment. Thus you would need to provide incentives for future hiring rather than current hiring. Perhaps alter the expectations about future business growth opportunities or increase the rate of minimum wage-employing firm creation, but either of these would probably work better alone than in conjunction with the minimum wage hike, so the combination seems a bit pointless overall.
Personally, you don't bother with the minimum wage; you let labor market wages float, and you go straight to NIT/EITC reform.
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