The Treatment of Minimum Wage in Principles of Economics Textbooks Revisited

Abstract

Following the Global Occupy movement and the Great Recession of 2008-09, the discussion of how economics is taught in undergraduate courses has become more topical with two main themes emerging. Students at prominent universities complain that professors preach free-market fundamentalism in first-year economics courses, while researchers have warned against the dangers of teaching economics as a settled science in undergraduate courses. We review the coverage of minimum wage policy in the Principles of Economics textbooks to determine whether the aforementioned criticism of free-market fundamentalism applies to the minimum wage topic. Most textbooks show that the minimum wage creates unemployment among unskilled workers and cite the empirical results of a survey paper by Brown et al. (1982) that a 10 percent rise in the minimum wage leads to a 1 to 3 percent increase in unemployment among teenagers. We propose three simple examples to present new implications of the minimum wage that are rarely discussed in current textbooks. Our goal is to provide a richer framework that highlights the effects of the minimum wage in a more nuanced way and help students develop critical thinking skills. A secondary goal is to put to rest the criticism that full-time professors teach economics as a settled science in undergraduate courses.