Income Security Policy Paper No. 10

Putting the Minimum Wage Debate in a Historical Context: Card and Krueger Meet George Stigler

Richard V. Burkhauser, Kenneth A. Couch, and David Wittenburg

June 1995 

Abstract:  Half a century ago, George Stigler stated that evaluation of minimum wage policy should revolve around two questions: Does such legislation diminish poverty? Are there efficient alternatives? This paper argues that historically these were and continue to be appropriate questions to ask with respect to this policy. It then replicates and evaluates the analysis in Chapter 9 of Myth and Measurement: The New Economics of the Minimum Wage with regards to these questions. Given the evolution of the Earned Income Tax Credit we conclude that, aside from nostalgia, it is hard to explain the continued support for increasing the minimum wage by those interested in helping the working poor, and that Card and Krueger provide little new evidence to rekindle such support.

A revised version of this paper was published as "Who Gets What From Minimum Wage Hikes: A Replication and Re-estimation of Card and Krueger," Industrial and Labor Relations Review, 49(3)(April 1996): 547-552. Those interested in this work should see that journal.