By our bootstraps: Origins and effects of the high-wage doctrine and the minimum wage

Taylor, Jason E.; Selgin, George

doi:10.1007/s12122-999-0014-1

Cited by 18 publications

(4 citation statements)

References 6 publications

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“…I develop a difference in spatial differences estimator based on the spatial fixed effects in Conley and Udry (2010) and Goldstein and Udry (2009) which weakens the standard 1 A critique of the high wage doctrine involving the quantity theory of money is presented in Taylor and Selgin (1999). This critique is not relevant to the subnational analysis below.…”

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confidence: 99%

Can minimum wages cause a big push? Evidence from Indonesia

Magruder

2013

Journal of Development Economics

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PRELIMINARY AND INCOMPLETE: PLEASE DO NOT CITEBig Push models suggest that local product demand can create multiple labor market equilibria: one featuring high wages, formalization, and high demand and one with low wages, informality, and low demand. I demonstrate that minimum wages may coordinate development at the high wage equilibrium. Using data from 1990s Indonesia, where minimum wages increased in a varied way, I develop a difference in spatial differences estimator which weakens the common trend assumption of difference in differences. Estimation reveals strong trends in support of a big push: formal employment increases and informal employment decreases in response to the minimum wage. Local product demand also increases, and this formalization occurs only in the non-tradable, industrializable industries suggested by the model (while employment in tradable and non-industrializable industry also conform to model predictions).

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confidence: 99%

Can minimum wages cause a big push? Evidence from Indonesia

Magruder

2013

Journal of Development Economics

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“…5 The Roosevelt Administration's pursuit of higher wage rates re£ects the widespread belief in the`high-wage doctrine,' which claimed that higher wage rates would result in more aggregate demand and hence higher output and employment. See Taylor and Selgin [1999]. 6 There are several notable exceptions to this lack of enforcement that have found a home in the colorful history of the NIRA.…”

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confidence: 99%

The Output Effects of Government Sponsored Cartels During the New Deal

Taylor¹

2002

The J Industrial Economics

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This paper uses the National Industrial Recovery Act of 1933, which set up industry‐wide cartels in the manufacturing sector of the US economy, to gain empirical insight into the current debate on the output effects of cartels. Recent theoretical studies have demonstrated ways in which cartels could expand, rather than reduce output as is traditionally thought. The New Deal cartel experiment does not support this ‘efficient cartel’ view. On the contrary, the legislation brought about a reduction in manufacturing output, as traditional cartel theory would predict.

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“…Changes in beliefs about the benefits of paying higher wages thus could help explain the breakdown of the NIRA cartels. Taylor and Selgin (1999) cite contemporary evidence strongly suggesting that some firm owners and policy makers indeed lost faith in the high-wage doctrine as the depression continued throughout the 1930s.…”

Section: The High-wage Doctrinementioning

confidence: 99%

“…would presumably only exacerbate the unemployment problem, there was a widespread belief among policy makers, businessmen, and economists that higher wages would increase purchasing power, demand, production, and ultimately, employment (O'Brien, 1989;Vedder and Gallaway, 1993;Taylor and Selgin, 1999). The high-wage doctrine claimed that an increase in wage rates would give workers more money to spend, which would in turn increase the demand for goods and services.…”

Section: The Logic Of the Niramentioning

confidence: 99%

An Anatomy of a Cartel: The National Industrial Recovery Act of 1933 and the Compliance Crisis of 1934

Klein

Taylor

2008

SSRN Journal

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This paper explores the nature and causes of the cartel compliance crisis that befell the National Industrial Recovery Act (NIRA) one year after its passage in 1933. We employ a simple game-theoretic model of the NIRA's cartel enforcement mechanism to show that the compliance crisis can largely be explained by changes in expectations, rather than a change in enforcement policy. Specifically, firms initially overestimated the probability that defection would be met with sanction by the cartel's enabling body, the National Recovery Administration-including a consumer boycott resulting from loss of the patriotic Blue Eagle emblem-and complied with the industry cartel rules. As these expectations were correctly adjusted downward, cartel compliance was lost. We support this hypothesis empirically with industry-level panel data showing how output and wage rates varied according to consumer confidence in the Blue Eagle. The analysis provides insight about cartel performance more generally.JEL: N42, N62, N82, Ll3, L41, L52

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By our bootstraps: Origins and effects of the high-wage doctrine and the minimum wage

Cited by 18 publications

References 6 publications

Can minimum wages cause a big push? Evidence from Indonesia

Can minimum wages cause a big push? Evidence from Indonesia

The Output Effects of Government Sponsored Cartels During the New Deal

An Anatomy of a Cartel: The National Industrial Recovery Act of 1933 and the Compliance Crisis of 1934

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