Is There an Explanation? Alternative Models of the Labor Market and the Minimum Wage
Author(s)
Card, David; Krueger, Alan B.
Abstract
Economists agree, almost unanimously, that raising the minimum wage causes increased unemployment. It is a straightforward deduction from the standard textbook model: Employers have a downward-sloping demand curve for labor; so if forced to pay more for labor, they will hire fewer workers. However, this widely held conclusion is inconsistent with the facts. As David Card and Alan Krueger demonstrate, increases in the minimum wage actually cause either no change or a small increase in employment. The empirical evidence against the standard analysis is developed in detail in this selection.
