Must-read: Menzie Chinn: “Estimates of the Elasticity of Employment with Respect to the Minimum Wage”

Must-Read: Menzie Chinn: Estimates of the Elasticity of Employment with Respect to the Minimum Wage: “Some people would have you believe the impact of a minimum wage hike…

…on employment is known to be large and negative. A cursory acquaintance with the literature helps in immunizing one (if one believes in vaccines and the like) against falling for such assertions. The meta-analysis of Doucouliagos, Hristos, and Tom D. Stanley. ‘Publication Selection Bias in Minimum-Wage Research? A Meta-Regression Analysis.’ British Journal of Industrial Relations 47.2 (2009): 406-428. [ungated working paper version] is useful in this regard.

I have drawn the mid-point of the estimate range cited by Professor Neumark (a respected researcher on minimum wages). It is useful to observe that the range he cites (-0.1 to -0.3) is substantially to the left of where the most precisely estimated locate elasticities are located. This suggests caution in attributing too much weight to one single estimate or set of estimates drawn from a single researchers. That researcher might have indeed obtained ‘the holy grail’ of elasticity estimates; but it is useful to recognize the variation in findings nonetheless, if one is to be a social scientist.