Tuesday, February 26, 2013 10:56am

Minimum Wage

Question A:

Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B:

The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 6
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 8
The weight of the evidence is that a modest increase in the minimum will have a small negative effect on employment of low skill workers.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 3
Bio/Vote History
         
Autor David Autor MIT Disagree 6
I'm not aware of any strong evidence demonstrating this result.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 4
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Chetty Raj Chetty Harvard Disagree 6
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 5
Even among hourly paid workers with less than a high school diploma, only about 11% earn the Fed min wage or less.
-see background information here
Bio/Vote History
         
Currie Janet Currie Princeton Uncertain 8
Past minimum wage increases have not had large disemployment effects, but we are still suffering high unemploment so effects may be worse.
Bio/Vote History
         
Cutler David Cutler Harvard Uncertain 5
The "noticeably" made me pause. A bit harder yes, but not sure how noticeably.
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 4
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 3
Bio/Vote History
         
Fair Ray Fair Yale Uncertain 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale No Opinion
Bio/Vote History
         
Goldin Claudia Goldin Harvard Disagree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
Some
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 7
The empirical evidence now pretty decisively shows no employment effect, even a few years later. See Dube, Lester and Reich in the REStat
Bio/Vote History
         
Hall Robert Hall Stanford Agree 3
I'm aware that some fairly clean natural experiments have not found effects.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 6
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 10
Unemployment among low-skilled workers is already high by historic standards, indicating that wages are already too high for market-clearing
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 7
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Uncertain 3
For some it will definitely reduce opportunities, but in other places it will not even be binding Net effect is hard to tell
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 5 Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 3
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 6
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 6
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Disagree 6
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 8
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Uncertain 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 3
There would surely be some effect, but "noticeably" seems a reach.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Uncertain 5
Bio/Vote History
         
Stokey Nancy Stokey Chicago Agree 8
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 4
Yes, I know the Econ 101 answer but the evidence suggests the effect on employment is between small and 0,.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 3
There is little evidence that small changes in minimum wage cause employment falls, but this is larger.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Did Not Answer
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 3
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 8
Expected earnings of low skill workers will rise because higher wages/hours will more than offset reduced employment.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 8
Decades of research on the minimum wage in the U.S. find that the distortionary effects are quite small.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Uncertain 3
Important to compare to alternatives like EITC.
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 3
Bio/Vote History
         
Chetty Raj Chetty Harvard Agree 6
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 8
About half min wage workers are under 25. About a quarter of min wage workers are working fewer than 35 hours per week.
-see background information here
Bio/Vote History
         
Currie Janet Currie Princeton Agree 8
Given that we have a minimum wage, indexing it would make a lot of sense.
Bio/Vote History
         
Cutler David Cutler Harvard Agree 5
The evidence is pretty clear that employment effects are small and benefits to workers are first order.
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Agree 9
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 4
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 4
Bio/Vote History
         
Fair Ray Fair Yale Uncertain 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale No Opinion
Bio/Vote History
         
Goldin Claudia Goldin Harvard Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
Depends what your social welfare function looks like
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 6
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 4
The benefits go to the somewhat more skilled at the expense of the lowest, which does not seem to be desirable policy.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Disagree 10
Workers most likely to benefit are those with medium skills. Workers most likely to lose (be unemployed) are those with the lowest skills.
Bio/Vote History
         
Judd Kenneth Judd Stanford Uncertain 6
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Uncertain 3
Total effects are hard to tell, plus there are other policies like the EITC that might be more effective.
Bio/Vote History
         
Klenow Pete Klenow Stanford Disagree 5
I think the EITC is better (targeted, not as distortionary).
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 3
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 8
Bio/Vote History
         
Nordhaus William Nordhaus Yale Agree 5
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 7
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 7
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Uncertain 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 4
Not the easiest call, but the minimum wage has been higher in real terms in the past, so this would not move us into uncharted waters.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Agree 7
Bio/Vote History
         
Stokey Nancy Stokey Chicago Uncertain 1
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 5
All methods of helping the poor cause distortions. This one not bad.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 4
But there are better alternative policies, most obviously increasing the EITC.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Did Not Answer
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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