Definitions and Basics

Price Controls, from the Concise Encyclopedia of Economics

Governments have been trying to set maximum or minimum prices since ancient times. The Old Testament prohibited interest on loans, medieval governments fixed the maximum price of bread, and in recent years governments in the United States have fixed the price of gasoline, the rent on apartments in New York City, and the minimum wage, to name a few. At times governments go beyond fixing specific prices and try to control the general level of prices, as was done in the United States during both world wars, during the Korean War, and by the Nixon administration from 1971 to 1973….

Price Ceilings: Shortages and Quality Reduction, at Marginal Revolution University

Rent Control, from the Concise Encyclopedia of Economics

Rent control, like all other government-mandated price controls, is a law placing a maximum price, or a “rent ceiling,” on what landlords may charge tenants. If it is to have any effect, the rent level must be set at a rate below that which would otherwise have prevailed….

Minimum Wages, from the Concise Encyclopedia of Economics

Minimum wage laws set legal minimums for the hourly wages paid to certain groups of workers. Invented in Australia and New Zealand with the admirable purpose of guaranteeing a minimum standard of living for unskilled workers, they have been widely acclaimed as both the bulwark protecting workers from exploitation by employers and as a major weapon in the war on poverty….

Agricultural Subsidy Programs, from the Concise Encyclopedia of Economics

Since the early 1930s, governments of wealthier countries around the world have used a dizzying array of schemes to support and subsidize farmers. In poor countries, where a large fraction of the population is engaged in farming, governments have tended to tax and regulate agriculture. As incomes grew and the population on farms dwindled in such countries as South Korea and Taiwan, those countries’ governments shifted from penalizing farmers to subsidizing them and protecting them from imports. These countries, along with Japan, now have among the highest subsidy and protection rates in the world. Forms of farm support also differ by country and commodity, and different forms have different impacts on agriculture and the rest of the economy.

In the News and Examples

“Economists Debate the Minimum Wage,” by Robert P. Murphy on Econlib, February 3, 2014.

[E]conomists across the board—whether left, right, or center—generally agreed that the minimum wage was ill-suited to help the poor. As we still teach introductory students in Econ 101, a price floor on low-skilled labor will (at least in the textbook diagrams) lead to unemployment among the very people minimum wage legislation allegedly helps. In addition to the textbook diagrams, economists also used to rely on a seemingly impregnable body of empirical studies backing up the claim that raising the minimum wage would throw unskilled laborers out of work.

However, starting in the 1990s, this consensus began to unravel. A series of econometric studies, relying on new techniques for holding “other things equal,” challenged the existing orthodoxy. Once the researchers controlled for other trends, it appeared that in practice, modest increases in the minimum wage had a negligible impact on employment in the low-skilled and teen populations. Indeed, this revisionist literature has grown so influential that, recently, 75 economists—including seven Nobel laureates—publicly signed a letter to prominent federal politicians, urging them to raise the federal minimum wage to $10.10 by 2016.


A Little History: Primary Sources and References

Price Ceilings: The US Economy Flounders in the 1970s, at Marginal Revolution University