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Synthetic Control Estimation Beyond Comparative Case Studies: Does the Minimum Wage Reduce Employment?

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  • David Powell

Abstract

Panel data are often used in empirical work to account for fixed additive time and unit effects. The synthetic control estimator relaxes the assumption of additive fixed effects for comparative case studies in which a treated unit adopts a single policy. This article generalizes the synthetic control estimator to estimate parameters associated with multiple discrete or continuous explanatory variables, jointly estimating the parameters and synthetic controls for each unit. I apply the estimator to study the disemployment effects of the minimum wage, estimating that increases in the minimum wage reduce employment.

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  • David Powell, 2022. "Synthetic Control Estimation Beyond Comparative Case Studies: Does the Minimum Wage Reduce Employment?," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 40(3), pages 1302-1314, June.
    • Handle: RePEc:taf:jnlbes:v:40:y:2022:i:3:p:1302-1314
    DOI: 10.1080/07350015.2021.1927743
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    Cited by:

    1. Sebastian Fossati & Joseph Marchand, 2024. "First to $15: Alberta’s Minimum Wage Policy on Employment by Wages, Ages, and Places," ILR Review, Cornell University, ILR School, vol. 77(1), pages 119-142, January.
    2. Xiaomeng Zhang & Wendun Wang & Xinyu Zhang, 2022. "Asymptotic Properties of the Synthetic Control Method," Papers 2211.12095, arXiv.org.
    3. Emery Thomas J. & Kovac Mitja & Spruk Rok, 2023. "Estimating the Effects of Political Instability in Nascent Democracies," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(6), pages 599-642, December.
    4. Gmeiner, Michael & Gmeiner, Robert, 2023. "Estimating the employment effect of the minimum wage through variation in compliance: evidence from five US states," LSE Research Online Documents on Economics 121277, London School of Economics and Political Science, LSE Library.
    5. Lennon, Conor & Teltser, Keith F. & Fernandez, Jose & Gohmann, Stephan, 2023. "How morality and efficiency shape public support for minimum wages," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 618-637.
    6. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    7. David Neumark & Maysen Yen, 2023. "The employment and redistributive effects of reducing or eliminating minimum wage tip credits," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(4), pages 1092-1116, September.

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