Greg Mankiw reports that Chetty/Saez’s recent study on income mobility finds that “91 percent of the variance [in a person’s income] is unexplained by [their] parents’ income.” “Based on adoption studies,” Mankiw speculates that “conservatively…half…of that 9 percent… [stems from] genetics rather than environment… [which] leaves only 4.5 percent of the variance attributed directly to parents’ income.” He notes that even if universal preschool could “completely ... Read More
Mankiw explains why it’s illogical to raise the minimum wage rather than the earned income tax credit
Advocates for raising the minimum wage complain that the wage hasn’t kept pace with inflation. They intentionally overlook a logical shift in policy to the earn income tax credit (EITC), which supplements the wages of low income workers with cash. Greg Mankiw, shows that the minimum wage plus the EITC has kept up with inflation. He explains why raising the minimum wage, which taxes the people who produce minimum wage employment—the customers and employers of minimum ... Read More
