Do Minimum Wage Hikes Cause Recessions?

by Dave Schuler on January 22, 2014

There’s an extremely interesting post at RealClearPolicy by Robert VerBruggen considering the to me surprising hypothesis that minimum wage hikes cause recessions:

I’m no economist, and I tend to share the intuition that minimum-wage hikes reduce employment to some degree, but put me in the coincidence camp here. All of the huge drops in teen employment coincide not only with hikes in the minimum wage, but also with recessions. So unless minimum-wage hikes are so harmful as to cause recessions, I don’t think there’s much evidence of a bad effect on employment here.

I agree with him. I think that what may be reflected is reverse causality.

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