The Minimum Wage Reconsidered,
RAND CORP SANTA MONICA CALIF
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Even on purely theoretical grounds, the effect of the minimum wage upon wage rates and employment is far from clear when coverage is incomplete, and the only firm evidence regarding the disemployment effects of the minimum wage indicates a substitution of adults for teenagers as the major consequence. That is, the minimum wage enables low income adult workers to better compete with teenagers and college students. But even if there exists an adverse employment effect, fragmentary evidence suggests that the elasticity of demand for low wage workers is quite inelastic. This suggests that such workers would be better off with higher income and more leisure if there is a mechanism for fairly allocating the higher level of unemployment among the workers. The data suggest that such an allocative mechanism exists.
- Personnel Management and Labor Relations