Unintended Consequences of Price Controls

Prof. Antony Davies explains that prices are not levers that set value, but rather, are metrics that respond to value. Therefore, since government cannot legislate value, attempts to control prices will generate unintended consequences. Using the minimum wage as an example, Davies demonstrates that minimum wage laws increase unemployment rates amongst low-skilled workers.

4 Comments

  1. Derek Lee

    Professor Davies, 

    Does the fact that the minimum wage has gone up in the years between 1980 and 2006 skew the data presented here? If so, is there a way to present the data while accounting for the minimum wage hikes that proves the same point?

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