Robin Hood and The Minimum Wage
What is the effect of the minimum wage on economic efficiency ? First when people say "economic efficiency" they tend to mean money metric welfare. The change in "economic efficiency" due to a reform is equal to the sum of the cash transfers which people would find equally pleasant or unpleasant as the reform. This rules out any role for egalitarianism.
The economics 101 answer is that the minimum wage reduces economic efficiency creating a decline in money metric welfare (or dead weight loss) equal to the roughly triangular area between a labor supply curve, a labor demand curve and the minimum wage line (this is called a Harberger triangle). Egalitarian economists like to argue that such triangles tend, in practice, to be small and dwarfed by the welfare benefits of redistribution. I want to argue that the minimum wage can increase money metric welfare.
The economics 102 answer is that this is possible if there is imperfect competition, in particular monopsony in the labor market (firms don't take market wages as given).
In this case, a minimum wage can caused increased employment. I will assume that this is not the case.
It is also possible in efficiency wage models with endogenous monitoring effort by employers (that would be economics 103). I will ignore this too.
The point, if any, of this post, is that it is possible if there are people choosing between seeking a minimum wage job or criminal activity. There are such people and they say so when asked. If there is a large transfer to disadvantaged workers and a small dead weight loss from the minimum wage, it makes looking for a minimum wage job more attractive (a slightly smaller chance of finding such a job times higher pay if one finds one makes it more attractive to search). It certainly makes quitting a minimum wage job less appealing.
This has efficiency benefits if the alternative to work includes crime not just leisure.
How does economics 101 miss this argument ? In economics 101 it is assumed there is no crime.
In fact it is rare in economic research. The work of Hershel Grossman is an exception.