Natural and Artificial Inducements to the Acquisition of Skills

Source: Cafe Hayek
by Don Boudreaux

“Free trade encourages a pattern of skill acquisition that is as consistent as is practically possible with resource scarcities and consumer and worker preferences. Not so, I think, with the skill acquisition induced by a minimum-wage hike. Any skill acquisition induced by a minimum-wage hike will be super-optimal both in quantity and timing. But even if this last point is incorrect, free trade differs from minimum wages in a more fundamental way. With free trade, each low-skilled worker who either won’t or can’t acquire higher skills in response to the rise in wages of high-skilled workers will nevertheless find employment as long as she is free to accept wages low enough to make her profitable to employ. In stark contrast, with a minimum wage in place, a low-skilled worker who either won’t or can’t acquire higher skills will find herself unemployed …” (07/07/21)

https://cafehayek.com/2021/07/natural-and-artificial-inducements-to-the-acquisition-of-skills.html