Tuesday, September 22, 2015 11:01am

$15 Minimum Wage

Question A: If the federal minimum wage is raised gradually to $15-per-hour by 2020, the employment rate for low-wage US workers will be substantially lower than it would be under the status quo.

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: Increasing the federal minimum wage gradually to $15-per-hour by 2020 would substantially increase aggregate output in the US economy.

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 Uncertain 8
Low levels of minimum wage do not have significant negative employment effects, but the effects likely increase for higher levels.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Uncertain 3
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Agree 8
$15.00 will be high enough in the productivity distribution of workers in 2020 to substantially reduce jobs for the less skilled.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 3
Bio/Vote History
         
Autor David Autor MIT Disagree 5
I don't think the evidence supports the bold prediction that employment will be substantially lower. Not impossible, but no strong evidence.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Uncertain 3
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Uncertain 5
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 4
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Uncertain 4
On the margin Card & Krueger show that minimum wages have little impact. In contrast, in France the minimum wage eliminates labor segment.
Bio/Vote History
         
Chetty Raj Chetty Harvard Disagree 7
Bio/Vote History
         
Chevalier Judith Chevalier Yale Did Not Answer
Bio/Vote History
         
Cutler David Cutler Harvard Uncertain 5
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 3
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 4
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 6
Empirical studies disagree on the sign of the effect. Few of those concluding in favor of negative are consistent with "substantially."
Bio/Vote History
         
Einav Liran Einav Stanford Agree 5
Bio/Vote History
         
Fair Ray Fair Yale Disagree 5
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Did Not Answer
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Uncertain 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Did Not Answer
Bio/Vote History
         
Hall Robert Hall Stanford Agree 4
Depends on how many exceptions are allowed. Most $15 city min wages exempt union members, for example.
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
I worry that it will be but we don't know enough. Firms may raise prices and the Fed may accommodate some inflation. But the change is large
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Disagree 8
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 7
Some will move to uncovered sectors and the underground economy, reducing (not reversing) the impact on actual employment.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Strongly Agree 8
A $15 minimum wage rise makes entry level / low wage jobs very expensive. It would move the U.S. to be more like France, Italy, etc.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Uncertain 5
In rural areas this will have a significant effect, but in many cities it would not matter much. Teenager employment likely to drop too.
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 3
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 4
Bio/Vote History
         
Maskin Eric Maskin Harvard Uncertain 4
The total increase is so big that I'm not sure previous studies tell us very much.
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 6
Evidence is that it would be lower by perhaps 1 - 2 %. Lots of margins for adjustments.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 7
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 5
Our elasticity estimates provide only local information about labor demand functions, giving little insight into such a large increase.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 5
Certainly in states where the median wage is close to $15. Smaller increases would impact employment much less.
-see background information here
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 1
Lower, probably; substantially lower, not clear at all.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Did Not Answer
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 7
Assuming inflation stays low. There is substantial evidence that labor demand slopes down, at least in the long run
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 4
Empirical evidence suggests the effects on employment would be modest.
Bio/Vote History
         
Udry Christopher Udry Yale Uncertain 5
Lower, yes. "Substantially"? Not clear. For small changes in min wage, there are small changes in employment. But this is a big change.
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Strongly Disagree 8
Bio/Vote History
         
Alesina Alberto Alesina Harvard Disagree 5
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Disagree 8
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Strongly Disagree 7
Bio/Vote History
         
Autor David Autor MIT Disagree 6
If it had any net positive effect, it would likely be very modest.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Disagree 2
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Uncertain 5
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 4
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Uncertain 5
It would generate extra demand provided that low-skilled citizen still find jobs and remain integrated in the society.
Bio/Vote History
         
Chetty Raj Chetty Harvard Disagree 7
Bio/Vote History
         
Chevalier Judith Chevalier Yale Did Not Answer
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 5
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Uncertain 3
Because of labor market frictions and given the high propensity of low-income workers to consume, the effect is uncertain to me..
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 4
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 6
Small demand-side effects and uncertain supply-side effects make it hard to conclude in favor of "substantially" higher.
Bio/Vote History
         
Einav Liran Einav Stanford Disagree 5
Bio/Vote History
         
Fair Ray Fair Yale Disagree 8
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Did Not Answer
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Did Not Answer
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 8
Does anybody have a mechanism in mind that would raise output? Stigler's argument that a min wage might not harm employment does not support
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
If employment not much affected and redistribution to workers demand could rise. But if sizable unemployment opposite could occur.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Uncertain 5
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Disagree 9
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Strongly Disagree 10
France, Italy, etc. have done this -- making it expensive to hire entry level workers -- contributing to low growth and high unemployment.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 1
Given ambiguous employment effects and the aggregate share of people getting raises, I doubt you get "substantially" more output.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Disagree 5
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 4
Bio/Vote History
         
Maskin Eric Maskin Harvard Uncertain 5
Aggregate demand should be bolstered, but the wage increase is so big that it's hard to predict what would happen with much confidence
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Disagree 8
Probably slight lowering of potential output, but < 1%.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 5
Bio/Vote History
         
Samuelson Larry Samuelson Yale Uncertain 1
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 5
Not a plausible stimulus package.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Did Not Answer
Bio/Vote History
         
Shimer Robert Shimer Chicago Strongly Disagree 7
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 3
Again, any effects are likely to be small.
Bio/Vote History
         
Udry Christopher Udry Yale Uncertain 6
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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