Yesterday’s post touched on several related points, and I’m afraid the most important one got buried near the end, so I want to repeat it:
1) In the presence of an effective minimum wage, all benefits of the earned income tax credit are transferred to employers. This is, as they say, a matter of Economics 101.
2) Paul Krugman argues that we should have an effective minimum wage in order to prevent some of the benefits of the earned income tax credit from being transferred to employers.
In this context, it should be remembered that Krugman ordinarily reserves his deepest scorn ...