In January of 2016, the city of Seattle raised its minimum wage from 11 dollars an hour to 13 dollars an hour for many businesses. This was part of a phase-in for a 15 dollar minimum wage that activists had been fighting for for years. You might have heard this story, but what you may not realize is that this change produced one of the most dramatic reversals of an established scientific literature in modern history. Let's start at the beginning. For a long time, economists have had a theory that minimum wage laws create unemployment by incentivizing employers to economize on low-skilled labour. But in 1992, two economists, David Card and Alan Krueger, came up with a clever new way to test this theory. They looked at New Jersey's minimum wage increase in 1992 from $4.25 to $5.05 per hour, and compared employment in fast food restaurants in New Jersey to employment in similar fast food restaurants in nearby Pennsylvania, which didn't raise its minimum wage. They chose to look at fast food because the fast food industry has a high concentration of low-wage workers, and because they expected fast food restaurants to have a high response rate to their telephone survey. What they found surprised both them and the economics profession as a whole. Card and Krueger found no evidence of disemployment effects in the New Jersey fast food restaurants they studied. Their study was released in 1994, and over the following two decades, economists produced hundreds of studies with similar results: minimum wage increases seemed to have no impact on employment. These studies tended to focus on the restaurant industry, because of its high concentration of low-wage workers, and on teen workers, many of whom work at or close to the minimum wage. This research shifted economists' views to be more friendly towards minimum wage increases, and it gave fuel to labour activists who wanted even higher minimum wages. After the financial crisis of 2008, this crystalized into the "Fight for $15" movement, which demanded that all businesses should pay their workers a minimum of $15 per hour. The city of Seattle was one of the first to adopt this as a policy, and began their phase-in with an increase to $11 for large businesses in April 2015 and $13 for many of those businesses in January of 2016. The city government was confident that their policy would work out for the best, so they commissioned a study by a non-partisan group at the University of Washington to measure the effects of the change. Importantly, unlike Card and Krueger and many other researchers since them, the researchers at the University of Washington didn't have to use restaurant workers or teenagers as a proxy for low-wage workers. That's because they had access to data from the State of Washington's Employment S ... https://www.youtube.com/watch?v=Cfi8r0WnwoE

This podcast episode was originally posted on September 19th, 2014. The original show notes follow. In this episode, Nathan Smith discusses the economics and history of migration and migration restrictions. Nathan is an Assistant Professor of Business Administration: Finance and Economics at Fresno Pacific University and regular blogger at Open Borders: The Case. We start the episode by discussing the economic impacts of Nathan’s own migration to Fresno. Students gain, as he adds to the supply of economics professors, other economists might lose from his competition in labour markets, people looking for parking near the University might lose, as he slightly reduces the supply of available parking spaces, and property owners gain from his demand for housing. In general, anyone Nathan transacts with gains from the transaction, while those who he competes with may suffer some slight loss. The big slogan among open borders advocates is that a significant reduction in migration restrictions could “double world GDP.” Nathan’s own most recent estimates show about a 91% increase world GDP, mainly because people would move from places where they can earn very little (e.g. places with dysfunctional institutions) to places where they can earn quite a bit more (e.g. places with well-functioning institutions, complementary factors of production, highly developed networks of specialization and exchange, etc.). There are complementarities between human capital and unskilled labour. For instance, great managers are more productive when there are many workers to manage, and the workers are more productive where there are great managers. Nathan’s estimates indicate that as much as 44% of the world’s population could migrate under open borders. This may seem high, but even conservative estimates would put the number of migrants in the billions. While migration would be hard for the first few migrants, diaspora effects would start to make the process smoother and more desirable. In the 19th century, when international migration was less restricted and more common, migrants would form communities within their new countries: there would be a Polish neighbourhood, an Irish neighbourhood, an Italian neighbourhood, etc. These diaspora communities would function as gateways to the new culture, giving people a place to settle while they adjusted to the language and culture of their new country. Today, with the exception of migration within the EU, there are no countries with open borders. While migration is somewhat easier for high-skilled workers, there are still many barriers. People call high-skilled migration “brain drain,” but that is really a perverse way of characterizing it. Are workers’ “brains” their countries’ property? Are they to be k ... https://www.youtube.com/watch?v=ZIYStF0w7Yk