Scott Sumner put together a good chart showing the correlation of unemployment rates with minimum wages in Europe. The chart shows that price and demand vary inversely. What a shock. Inevitably the first commenter claims that Scott is wrong. There must be another explanation because 'rigorous empirical models' 'show' that minimum wages have no effect on employment.
I am always wary of people who cite ‘rigorous’, ‘empirical’, ‘models’ as evidence for real world phenomena. Particularly when we have hundreds of truly empirical studies using real historical data from all over the world that confirm that demand for labor varies inversely with its price (like every other bloody commodity whether legal or banned) .
Models are crude representations of reality not reality itself and reflect the modelers particular biases. Many of the models are funded by governments. Governments like power and control so the models tend to show top down state manipulation of basic variables as ‘working’.
It’s always amusing to see one of the model ‘faithful’ confronted by actual, you know, facts. They stutter, their face flushes, for a moment their mind is blank. Then years of statist catechisms kick in and they announce with the vigor of a true believer that their God The Model is true and even more importantly is ideologically righteous and therefore it’s reality that has is wrong.
Hallelujah, Amen.
