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Increases In Minimum Wage May Not Help the Economy

June 27th, 2013
in econ_news, syndication

Econintersect: A Federal Reserve Bank of Chicago study finds that increases in minimum wages may not have any long term economic benefits.

Proponents of minimum wage increases often claim that minimum wage hikes will significantly boost the economy. We are skeptical that minimum wage hikes boost GDP in the long run. Nevertheless, we do find evidence that putting money into the hands of consumers, especially low-wage consumers, leads to predictable increases in spending in the short run.

Follow up:

 

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How does a federal minimum wage hike affect aggregate household spending?

 

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