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August 24, 2006



I think you miss a more fundamental point, which is simply that most libertarians and hence supporters of "flat taxes" (which of course aren't flat if they have a personal allowance, and should really be called 'less progressive taxes', but that gives the game away too much) really aren't interested in helping the poor. They also aren't interested in having higher marginal rates on their own income, which is why these suggestions of 15,000 tax-free allowances and 50% marginal rates are so naive.

The minimum wage is indeed seen as a moral thing - more akin to health and safety legislation, which also presumably adds to unemployment.

Laurent GUERBY

Am I missing something or Machin's paper shows constant or slight increase in hours worked and a significant increase in earnings (Table 1) from the raise in the minimum wage?

Number of reasonable worked hours multiplied by minimum wage plus social welfare as something that can be meaningfully compared to cost of living (housing, health, transportation, minimum equipment). If too low, I assume economists take into account at least some probable negative effects for people, like incitation to go on the other side of the law because you have no other choice, this costs taxpayer money too and ultimately the end of relatively peaceful society.

Kevin Carson

One reason that the minimum doesn't have much of an effect on unemployment is that it is applied across the board to all employers in a particular market and industry (i.e., the fast food restaurants in a locality). So it doesn't affect price competition between them. The real effect depends on the elasticity of demand for fast food, which probably isn't all that great.

IOW, Boudreaux must not be familiar with the phrase "ceteris paribus."

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