Tuesday, March 19, 2019

DiLorenzo vs. Krugman on Krueger

Update below.

Tom DiLorenzo called it.

It shows the sad state of mainstream economics profession when Dilorenzo has to state the obvious and then provide a warning:

"I just read that economist Alan Kreuger has died (an apparent suicide).  Condolences to the Kreuger family.  Much will be written about this in the next couple of days since Kreuger was a Clinton and Obama adviser.  His biggest claim to fame (notoriety is more like it) is a study that supposedly repealed the economic law of demand by claiming that increases in the minimum wage do not increase unemployment but may actually decrease it.  The study was debunked by the National Bureau of Economic Research (NBER) and by other peer-reviewed research, but to this day many commentators who are fully aware of the debunking pretend that it never occurred while citing Kreuger’s sloppy, debunked, if not dishonest study.  Expect them to do a lot of this for the next week or so."

Seconds after reading the above, the latest edition of Paul Krugman's new newsletter hit my inbox. He had this to say:
 What I can talk about is Alan’s work, and why it mattered so much to other economists, myself very much included. For his research arguably did more to change how we view the economy than that of any other modern economist.
Alan’s most influential, paradigm-shifting work was his study with David Card on the effects of minimum-wage hikes.
Before Card and Krueger, most economists just assumed that raising the minimum wage leads to lower employment. But Card and Krueger realized that this was a proposition you can test. Their initial study compared employment in New Jersey and Pennsylvania before and after New Jersey raised its minimum wage. And they found no adverse effect on employment — if anything, a small rise in New Jersey relative to its neighbor.
This study opened a new frontier in economic research...
This paper alone would secure Alan Krueger’s reputation as one of the greatest labor economists ever. But he did far more, on everything from growth and the environment to the effects of computers on wages — and he was a public servant too. 


No comments:

Post a Comment