Fred Foldvary wrote: > raising the minimum wage today has support among much of > the population, and some (probably a minority of) > economists, who think this would generally improve the > status of low-income families. I presume most economists > today would regard that proposition as a fallacy. The "minimum wage fallacy" is the deduction of welfare effects for low-income families from (often implicit) models lacking institutional detail and, at a minimum, some evidence on the elasticity of demand for minimum wage labor (much of which is part-time, so that fewer hours purchased need not translate directly to fewer workers hired). The fallacy often manifests in statements like "economic theory shows that raising the minimum wage will hurt low-income families by increasing their unemployment". Even though the theory invoked is generally principles-level, the claim is still fallacious. While it is common in principles courses to demonstrate that in competitive markets a minimum wage lowers the amount unskilled labor hours hired and to call that (without warrant) an increase in unemployment, it is much less common to explore the implications for incomes (which depends on the elasticity of demand). Cheers, Alan Isaac PS A visiting lecturer with a Univ of Chicago degree once described to me how his initial thesis work on the minimum wage showed no negative employment effect. He said his advisor viewed this a proof enough (i.e., nothing in the empirical research was judged methodologically inadequate) that his initial work was flawed and sent him back to "fix" it. This was some years before the Card and Kreuger study.