Potential for Misguided Labor Market Regulations

Christopher DeCarlo

Advisor: Alex T Tabarrok, PhD, Department of Economics

Committee Members: Bryan Caplan, Thomas Stratmann

Online Location, Zoom
July 25, 2024, 01:00 PM to 03:00 PM

Abstract:

This dissertation attempts to illuminate unforeseen circumstances of well-meaning labor market regulations.

The first chapter examines the impact of changes in state level minimum wages on the education and employment decisions of young people.  This chapter presents a choice model that helps explain the differences in educational/employment outcomes for various demographic groups and putting those choices into the larger context of income inequalities.  Advocates of minimum wage increases often point to increases in earned wages as evidence of improved economic inequality while ignoring the choice impact for young workers who may forgo long-term earnings for short-term increases in wages.  By examining these choices in greater detail, this chapter looks to illuminate an unforeseen weakness of minimum wage increases as prescriptive policy.

The second chapter uses a similar choice model to examine the mobility choices of low-wage workers in response to changes in local and state effective minimum wages.  Utilizing traditional measures of minimum wages and of state/local minimum wage competitiveness, this chapter elaborates on existing literature on the residential choices of low-wage workers.  Theoretically, increases in potential earnings is an attractive incentive to migration, however existing work seems to suggest that increases in minimum wages actually discourage in-migration of low-wage workers.  This chapter presents a model that accounts for minimum wage relativity, re-contextualizing the location choices of these workers in a patchwork of state and local wage policies.

The third chapter examines the labor market impacts of state fair hiring policies.  Many states have become heavily invested in fair hiring regulations; ‘ban-the-box’ policies regarding questions of felony convictions on job applications is a prominent example of policies designed to improve the job-market prospects of specific individuals that may actually undermine the projections for the larger demographic group.  This chapter reviews some of these policies and presents models of the labor market effects of these policies with an emphasis on evaluating the potential for statistical discrimination in labor market outcomes.