We consider an economy (e.g., Chile 1973-83 or modern Turkey) with a minimum wage sector and a free sector and a tax on labor earnings. We ask can a minimum wage hike raise employment and economic efficiency?

In an overlapping generations model, capital and labor produce two tradeable goods. A kleptocratic government spends the tariff revenue. Trade liberalization benefits the retired generation if and only if the relative price of the capital intensive good rises. Starting from autarky, a small...

Recently, Jans, Wall and Hariharan demonstrated that "there may exist an incentive for a welfare-maximizing government that normally prefers free trade to maintain a protectionist reputation by imposing a voluntary export restraint, VER." We show in the context of their model, which postulates a...

Sebastian Edwards and Alejandra Cox Edwards in their analysis of the Chilean economic liberalization argue that both capital inflows and outflows may have harmed the Chilean economy. They model the Chilean economy as using labor and fixed factors to produce traded and non-traded goods subject to...

Milton Friedman has suggested that the political power of the American Federation of Teachers and the National Education Association (the two major teachers unions) has been instrumental in defeating the adoption of educational vouchers. We test this hypothesis. We find that a campaign...

We examine the major interest groups in the debate over allowing the re-importation of prescription drugs by utilizing a logit model and instrumental variables. Consistent with political support approach, the evidence suggests that Representatives are maximizing their electoral prospects:...

We consider an economy with a tax on all labor earnings. We discover that a slightly binding minimum wage on one sector can enhance efficiency. The minimum wage attracts high-reservation wage workers into the minimum-wage sector. If the labor demand curve in the free sector is quite flat, the...