The Economics and Ethics of Minimum Wage Legislation

Prasch, Robert E.; Sheth, Falguni A.

doi:10.1080/00346769900000017

Cited by 25 publications

(11 citation statements)

References 17 publications

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“…This increase in consumption may be more prominent when an economy operates below the full-employment level. With the assumption of sticky prices, an increase in the minimum wage would likely increase the effective demand (Prasch and Sheth, 1999). Therefore, the economy should experience an overall positive consumption-led growth due to the increase in the minimum wage (Lavoie, 2014; Stabile, 2018).…”

Section: Resultsmentioning

confidence: 99%

The effect of minimum wages on consumption in Canada

Jung

McFarlane

Das

2020

The Economic and Labour Relations Review

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We use Canadian data over the period of 1991Q1 to 2019Q2 to examine the effect of higher minimum wages on consumption, measured as the real retail trade sales per adult population. Such an examination is rare in the extant literature and it is timely given the increasing debate concerning the stimulus versus inflationary effects arising from wage polices because of COVID-19 global pandemic. We apply the autoregressive distributed lag model to determine the causal relationship between these variables. We find one long-run cointegrating relationship that runs from the real minimum wage to the real retail trade sales. In addition, we find that a 1% increase in the minimum wage is associated with almost a 0.5% increase in real retail trade sales in the long run. While our findings rest on several statistical assumptions, there is strong evidence in support of the position that minimum wage strengthens aggregate consumer spending, and thereby the standard of living, economic growth and stability. This is a position that differs from the conclusions drawn from mainstream academic and policy debates on the economic usefulness and efficacy of minimum wage increases. JEL Codes: C30, E21, E24

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Section: Resultsmentioning

confidence: 99%

The effect of minimum wages on consumption in Canada

Jung

McFarlane

Das

2020

The Economic and Labour Relations Review

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“…This leads directly to the question of where the origin of these different perceptions lies. The main ethical argument, which is also supported by social economists like Prasch and Sheth (1999), is that employees who 'play by the rules' should earn a 'living wage'. This view is based on the perception that work has to be done (the 'rule') and the ones who do it deserve the reward with which they can afford a more or less decent living.…”

Section: Discussionmentioning

confidence: 99%

Individual Utility Effects of Minimum Wages in a New Activity-Choice Framework

Mann

2014

Forum for Social Economics

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A new model combining occupational and consumption choices into activity choices is applied to estimate the effect of a minimum wage on utility levels. It is shown that utility is affected negatively by a minimum-wage boundary, regardless of whether the individual concerned switches to a different job or to selfemployment, or whether he leaves the working sector to pursue activities in the unpaid or consumer sector. So long as wages remain the main tool for redistributing wealth, there will be an unavoidable trade-off between utility maximisation and distributional equality.

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“…In doing this, of course, he ignores the diversity of economic findings among economists. But the point here is that he makes no attempt to analyze the moral argument, held implicitly by most proponents of the minimum wage, that a prosperous country like the United States should be able to provide a "living wage" to all persons working forty hours a week (Prasch and Sheth 1999).…”

Section: Milton Friedmanmentioning

confidence: 98%

The moral ecology of markets: on the failure of the amoral defense of markets

Finn¹

2003

Review of Social Economy

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Many economists have defended capitalism; most have tried to do so within the self-imposed methodological constraint that economists should employ only empirical arguments, not normative ones. This essay examines three classic amoral defenses of capitalism—by Milton Friedman, James Buchanan, and Friedrich Hayek—and argues that each fails on its own terms, since each implicitly incorporates moral presumptions essential to the author's argument. Constructively, the essay proposes that no one can adequately endorse (or critique) markets without making a moral evaluation of their context—their “moral ecology.” Four issues are identified as necessarily addressed in every adequate evaluation of markets. The essay does not endorse any one position on these elements, but argues instead that seemingly incommensurable standpoints on markets—ranging from Marxist to libertarian—actually represent positions on the these four basic issues.markets, morality, capitalism, Milton Friedman, James Buchanan, Friedrich Hayek,

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The Economics and Ethics of Minimum Wage Legislation

Cited by 25 publications

References 17 publications

The effect of minimum wages on consumption in Canada

The effect of minimum wages on consumption in Canada

Individual Utility Effects of Minimum Wages in a New Activity-Choice Framework

The moral ecology of markets: on the failure of the amoral defense of markets

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