Almost everyone has heard of the Card/Krueger minimum wage paper. No
apparent effect, suggesting a perfectly inelastic (vertical) labor
demand curve.
But they had another equally perplexing paper on the Mariel boat lift.
Large influx of unskilled Cuban labor into southern Florida, but no
perceptible downward effect on wages. (This summary is based on
hearsay, so please correct me if I misstate anything). In other words,
this paper suggests a perfectly elastic (horizontal) labor demand curve.
Note further that both of these papers focus on the market for
low-skilled labor, albeit in different states. So as puzzling as both
papers are separately, they are even more puzzling taken together: how
can labor demand be at once perfectly inelastic and perfectly elastic?
Anyone able to resolve this puzzle? And has anyone else pointed this
out?
--
Prof. Bryan Caplan [EMAIL PROTECTED]
http://www.gmu.edu/departments/economics/bcaplan
"[W]hen we attempt to prove by direct argument, what is really
self-evident, the reasoning will always be inconclusive; for it
will either take for granted the thing to be proved, or something
not more evident; and so, instead of giving strength to the
conclusion, will rather tempt those to doubt of it, who never
did so before."
-- Thomas Reid, _Essays on the Active Powers of the Human Mind_
