Scott Sumner at Money Illusion does some interesting comparisons of unemployment rates and the minimum wage for countries in Western Europe. Anyone want to collect the data to plot a scatter diagram? The section quoted below is all sort of an addendum to a different post, but is intriguing [ht Cafe Hayek]. I find it especially interesting that the Scandinavian countries have no minimum wage law. Here are his observations:
Regarding minimum wage,* here is some data for Western Europe:
There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg). Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is France with 11.1% unemployment.
There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.) Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group. The median country is Iceland, with a 5.5% unemployment rate. The biggest country in Europe is Germany. No minimum wage and 5.2% unemployment.
Still want to raise our minimum wage to $10? Germany used to have really high unemployment. Then they did labor reforms to allow more low wage jobs, combined with subsidies for low wage workers. Now they don’t have high unemployment.
Still want to raise our minimum wage to $10?
You can easily say, "Yeah, yeah, but there are other things going on that aren't taken into consideration with a simple two-variable comparison." Okay, but how do they affect unemployment? Or are those things AND a high minimum wage functions of something else?