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Reconciling the evidence of Card and Krueger (1994) and Neumark and Wascher (2000)

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  • Olli Ropponen

Abstract

We employ the original Card and Krueger (1994) and Neumark and Wascher (2000) data together with the changes-in-changes (CIC) estimator to re-examine the evidence of the effect of minimum wages on employment. Our study reconciles the controversial positive average employment effect reported by the former study and the negative average employment effect reported by the latter study. Our main finding, which is supported by both datasets, is that the controversial result remains valid only for small fast-food restaurants. This finding is accompanied with a new possible explanation.

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Bibliographic Info

Paper provided by Government Institute for Economic Research Finland (VATT) in its series Working Papers with number 24.

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Date of creation: 29 Apr 2011
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Handle: RePEc:fer:wpaper:24

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Keywords: CIC estimator; employment; minimum wage; nonlinear treatment effect models;

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  1. Yatchew,Adonis, 2003. "Semiparametric Regression for the Applied Econometrician," Cambridge Books, Cambridge University Press, number 9780521812832, November.
  2. Guido M. Imbens & Jeffrey M. Wooldridge, 2008. "Recent Developments in the Econometrics of Program Evaluation," NBER Working Papers 14251, National Bureau of Economic Research, Inc.
  3. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, January.
  4. William Wascher & David Neumark, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment," American Economic Review, American Economic Association, vol. 90(5), pages 1362-1396, December.
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Cited by:
  1. Essi Eerola & Teemu Lyytikäinen, 2012. "On the role of public price information in housing markets," Working Papers 30, Government Institute for Economic Research Finland (VATT).

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