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03-27-2009, 04:46 AM #2Senior Member
Does raising minimum wage cause inflation?
theoretically and empirically the answer is yes for the most part....while the money supply itself still plays a large role in inflation as well as what people do with the extra money when they get it...there is some evidence that saving it as opposed to spending it could hedge inflation...i wish i still had my old labor econ book with the graphs to prove it, perhaps ill go look it up tomorrow
and while i dont know if you could reverse it exactly, you could certainly put downward pressure on inflation by lowering the minimum wage
thats the thing, i know you are a fan of the free markets and the minimum wage if actually a market inefficiency because theoretically there are people that would be willing to work for a lower wage but the law doesnt permit it, and therefore the firm loses out
the thing ive noticed throughout my study of economics is that REAL growth (real as in actual growth without inflation) is very hard to define and determine what the many factors are
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