The determinants of minimum wage rates

This paper attempts to test the degree of responsiveness of Canadian provincial governments to different political groups in establishing their relative minimum wage policies over the 1975–1982 period. It discusses alternative explanations of minimum wage policies and focuses on the political market approach, where women, youth, small business and unions play a role. An econometric model is specified and estimated on pooled annual time series and cross-section data for nine provinces in Canada. The results tend to support most of the hypotheses.     

Social policy implications of the minimum wage law

Poverty and unemployment are two critical issues facing the United States today. Linked to both of these is the federal minimum wage law. Established under the Fair Labor Standards Act of 1938, the purpose of the law was—and still is—to eliminate, as rapidly as possible, labor conditions thought to be harmful to the “health, efficiency, and general well-being of workers ... without substantially curtailing employment or earning power.”¹ In other words, to eliminate low wages without eliminating jobs. This is a laudable goal, with which no one is likely to disagree. The question remains as to how effective the law has been in achieving this goal. Has it eliminated poverty? Or has it, to the contrary, had effects detrimental to those the law was designed to help? It is the contention here that the minimum wage law has played a significant role in causing unemployment among the most disadvantaged groups, including blacks, teenagers, unskilled workers, and people living in economically depressed regions. It is therefore proposed that further increases in the minimum wage be blocked and that the rate and coverage be held at the present level.     

Does the minimum wage affect welfare caseloads?

Although minimum wages are advocated as a policy that will help the poor, few studies have examined their effect on poor families. This paper uses variation in minimum wages across states and over time to estimate the impact of minimum wage legislation on welfare caseloads. We find that the elasticity of the welfare caseload with respect to the minimum wage is between 0.1 and 0.2, but this estimate is sensitive to the sample period and assumptions about state trends. We tentatively conclude that higher minimum wages increase welfare dependence; however, more research is warranted.© 2005 by the Association for Public Policy Analysis and Management     

The minimum wage and the poor: The end of a relationship

The belief that minimum-wage legislation helps the working poor is one reason for its continued popular support. The authors track the household incomes of low-wage workers and find that a radical transformation has occurred in the half century since the passage of the original minimum-wage law. Today most low-wage workers live in households well above the poverty line. Hence, those living in poverty will get only about 11 percent of the gains from the higher minimum-wage increase proposed in the Kennedy-Hawkins Bill. Low-wage workers in families with incomes three or more times the poverty line will get nearly 40 percent. Thus it is not clear that increases in the minimum wage make good policy even if no jobs are lost as a result.     

A political economic analysis of congressional voting patterns on NAFTA

This paper delves into the question of the determinants of Congressional voting on NAFTA. It uses a logit model to examine both House and Senate votes and is able to use district specific estimates in the former. It finds only very limited support for the thesis that narrowly defined employment gainers and losers were important determinants of Congressional voting patterns, though some substantial support that districts that were highly agricultural or already possessed a substantial Hispanic population and skilled labor force and had the most to gain from the general effects of NAFTA lead to a positive effect on the probability that a member of the House would vote affirmatively. Contributions from labor unions lowered the likelihood of affirmative votes. Political partisanship and ideological positions apparently had little effect on the votes. A Representative's political capital had a marginally significant effect on the probability on an affirmative vote, but it performed positively in the Senate and negatively in the House.     

The economic organization of legislatures and how it affects congressional voting

Congress confronts two major organizational problems that affect the behavior of legislators, party leaders, and groups doing business with congressional committees: The costly nature of monitoring and the absence of explicit mechanisms for upholding agreements. The problem of monitoring implies that party leaders will have a difficult time influencing decisions made in decision-making arenas where the actions of legislators are less visible, as in congressional committees. While legislators can evade leadership monitoring of their actions within committees, once an issue leaves a committee, the costs of monitoring decline, and leadership influence increases. The absence of mechanisms for assuring that legislators keep their bargains means that groups will place an emphasis on dealing with reliable legislators — those who can be counted upon to uphold their end of a bargain. Thus, party leaders are more effective in influencing floor voting because of their better ability to monitor legislator behavior; however, obligations to important interest groups will be more immune to leadership influence because of the incentives for committee members to adhere to their bargains.     

Whom do you trust? An analysis of executive and congressional economic forecasts

Economic forecasts play an increasing role in U.S. budgetary and fiscal policies. This paper analyzes the accuracy and bias of economic forecasts prepared by the Executive Branch and Congress. Short-run forecasts by the Executive Branch for the forthcoming year do not appear biased. They are as accurate as private forecasts and the forecasts of the Congressional Budget Office (CBO); they are not sensitive to political factors such as the size of the deficit. At the same time, the accuracy of Executive branch's short-run economic forecasts has not improved over the period from 1962 to 1984, and the forecasts themselves can be well approximated by simple, single-equation models that use a small number of variables. In contrast to short-run forecasts, long-run economic forecasts of both the Executive branch and CBO are consistently optimistic. The degree of optimism increases with the length of the forecasting horizon and the degree of fiscal pressure the year in which they are issued. The Reagan Administration's long-run forecasts, while typically optimistic, have not been rosier than those issued under previous administrations.     

After the congressional veto: Assessing the alternatives

Congressional choice of effective replacements for the recently banned legislative veto will require an accurate understanding of the actual results of the now unconstitutional device. The impact of the veto varied strikingly depending on, among other things, the type and target of the veto and on the principal sites of review in Congress itself. No single mechanism will suffice. Rather a variety of devices are available and under consideration. The underlying question raised by this analysis is which effects of the veto are worth perpetuating in light of past results and stated congressional objectives.     

The employment and redistributive effects of reducing or eliminating minimum wage tip credits

Recent policy debate on minimum wages has focused not only on raising the minimum wage, but on eliminating the tip credit for restaurant workers. We use data on past variation in tip credits—or minimum wages for restaurant workers—to provide evidence on the potential impacts of eliminating (or reducing) the tip credit. Our evidence points to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without positive earnings effects on those who remain employed sufficiently large to raise total earnings in this sector. And most of our evidence provides no indication that higher tipped minimum wages would be well targeted to poor or low-income families or reduce the likelihood of being poor or very low income.     

Determinants of public support for EU membership: Data from the Baltic countries

Abstract. Focusing on individual–level determinants of public support for EU membership, this paper brings the literature on Western European integration to bear on the Eastern and Central European accession. Existing theories have focused on utilitarian expectations, political values, and domestic politics as determinants of public attitudes toward European integration. The paper discusses the applicability of the proposed theories and measures in the Eastern European context and develops a model that identifies micro–level economic expectations, support for democratic norms, trust in the national government, and perceptions of ethnic tension as possible determinants of public support for EU membership. These propositions are tested with survey data from Estonia, Latvia, and Lithuania, using logistic regression. The results lend strong support to the expected gains and domestic politics hypotheses but suggest that individual competitiveness, a frequently used proxy for economic expectations, may be a poor predictor of attitudes toward the EU in the CEE context. Perceptions of increased ethnic tensions were found to decrease minority support for EU membership in Latvia, the Baltic country that has pursued particularly stringent citizenship and minority policies. Identification with democratic norms did not influence opinions in Latvia and Estonia, while having an unexpected negative effect on the attitudes of the Lithuanian public.     

Determinants of public support for EU membership: Data from the Baltic countries

Focusing on individual–level determinants of public support for EU membership, this paper brings the literature on Western European integration to bear on the Eastern and Central European accession. Existing theories have focused on utilitarian expectations, political values, and domestic politics as determinants of public attitudes toward European integration. The paper discusses the applicability of the proposed theories and measures in the Eastern European context and develops a model that identifies micro–level economic expectations, support for democratic norms, trust in the national government, and perceptions of ethnic tension as possible determinants of public support for EU membership. These propositions are tested with survey data from Estonia, Latvia, and Lithuania, using logistic regression. The results lend strong support to the expected gains and domestic politics hypotheses but suggest that individual competitiveness, a frequently used proxy for economic expectations, may be a poor predictor of attitudes toward the EU in the CEE context. Perceptions of increased ethnic tensions were found to decrease minority support for EU membership in Latvia, the Baltic country that has pursued particularly stringent citizenship and minority policies. Identification with democratic norms did not influence opinions in Latvia and Estonia, while having an unexpected negative effect on the attitudes of the Lithuanian public.     

The congressional veto: Shifting the balance of administrative control

During the past decade, hundreds of provisions have been enacted by Congress giving that body some form of control over the projects and regulations of federal agencies. Pressures for more far-reaching measures of this sort, including a proposal to vest Congress with a veto of all regulations promulagated by federal agencies, have intensified debate on both the constitutional merits and administrative wisdom of the congressional veto process. These measures are exerting considerable effect, delaying the decisions of the agencies, reshaping the regulatory process, and increasing the direct congressional role in setting administrative agendas and substantive policies. The result is a transfer of administrative power to the more than 200 standing committees and subcommittees of the Congress-and, significantly, to their staffs. This transfer has served to impede the executive chain of command, to diminish the role of independent regulatory agencies as experts in their respective fields, to devalue judicial review of agency action, and to reduce the accountability of the affected agencies.     

Determinants of the U.S. wheat producer support price: Do presidential elections matter?

The paper's focus is on the determinants of the U.S. wheat producer support price. The results of the time-series analysis suggest that this price is largely determined by the previous price, the expected U.S. share in world exports, and expected program costs. Presidential elections also influence U.S. wheat price policies. All other things being equal, the support price tends to be lower in election years than in other years. This suggests that small interest groups' relative political economic power may be less pronounced in election years if they do not succeed in positioning themselves on the political economic market such that they contain the potentially decisive voter.