Credible Research Designs for Minimum Wage Studies: A Response to Neumark, Salas and Wascher
We assess the Neumark, Salas and Wascher (NSW) critique of our minimum wage findings. Recent studies, including one by NSW, obtain small employment elasticities for restaurants, -0.06 or less in magnitude. The substantive critique in NSW thus centers primarily upon teens. Using a longer (19792014) sample than used by NSW and in our own previous work, we find clear evidence that teen minimum wage employment elasticities from a two-way fixed-e ects panel model are contaminated by negative preexisting trends. Simply including state-specific linear trends produces small and statistically insignificant estimates (around -0.07); including division-period e ects further reduces the estimated magnitudes toward zero. A LASSO-based selection procedure indicates these controls for time-varying heterogeneity are warranted. Including higher order state trends does not alter these findings, contrary to NSW. Consistent with bias in the fixed-e ects estimates from time-varying heterogeneity, first di erence estimates are small or positive. Small, statistically insignificant, teen employment elasticities (around -0.06) obtain from border discontinuity design with contiguous counties. Contrary to NSW, such counties are more similar to each other than to other counties. Synthetic control studies also indicate small minimum wage elasticities (around -0.04). Nearby states receive significantly more weight in creating synthetic controls, providing further support for using regional controls. Finally, NSW’s preferred new matching estimates are plagued by a problematic sample that mixes treatment and control units, obtains poor matches, and shows the largest employment drops in areas with relative minimum wage declines.
In a recent and storied paper, David Card and Alan Krueger (1994) claim to find evidence that the 1992 New Jersey minimum wage hike raised the level of employment in fast food restaurants in that state (although not significantly by conventional statistical standards). In a response widely-cited in the press, David Neumark and William Wascher (1995), using data on payroll hours, claim to show t...متن کامل
We review the burgeoning literature on the employment effects of minimum wages – in the United States and in other countries – that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wag...متن کامل
Ziliak for helpful comments. The views expressed are those of the authors only, and do not necessarily reflect those of the Federal Reserve Board.متن کامل
Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply
Replication and reanalysis are important endeavors in economics, especially when new findings run counter to conventional wisdom. In their Comment on our 1994 American Economic Review article, David Neumark and William Wascher (2000) challenge our conclusion that the April 1992 increase in the New Jersey minimum wage led to no loss of employment in the fast-food industry. Using data drawn from ...متن کامل