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Credible Research Designs for Minimum Wage Studies

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Author Info

  • Allegretto, Sylvia

    ()
    (University of California, Berkeley)

  • Dube, Arindrajit

    ()
    (University of Massachusetts Amherst)

  • Reich, Michael

    ()
    (University of California, Berkeley)

  • Zipperer, Ben

    ()
    (University of Massachusetts Amherst)

Abstract

We assess alternative research designs for minimum wage studies. States in the U.S. with larger minimum wage increases differ from others in business cycle severity, increased inequality and polarization, political economy, and regional distribution. The resulting time-varying heterogeneity biases the canonical two-way fixed effects estimator. We consider alternatives including border discontinuity designs, dynamic panel data models, and the synthetic control estimator. Results from four datasets and six approaches all suggest employment effects are small. Covariates are more similar in neighboring counties, and the synthetic control estimator assigns greater weights to nearby donors. These findings also support using local area controls.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7638.

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Length: 81 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7638

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Keywords: minimum wage; youth employment; border discontinuity; policy evaluation;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Some pitfalls in establishing the impact of minimum wage hikes
    by Economic Logician in Economic Logic on 2013-11-07 14:42:00
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Cited by:
  1. Dube, Arindrajit, 2013. "Minimum Wages and Aggregate Job Growth: Causal Effect or Statistical Artifact?," IZA Discussion Papers 7674, Institute for the Study of Labor (IZA).
  2. Holmlund, Bertil, 2013. "What Do Labor Market Institutions Do?," IZA Discussion Papers 7809, Institute for the Study of Labor (IZA).
  3. Allegretto, Sylvia & Dube, Arindrajit & Reich, Michael & Zipperer, Ben, 2013. "Credible Research Designs for Minimum Wage Studies," Institute for Research on Labor and Employment, Working Paper Series, Institute of Industrial Relations, UC Berkeley qt3hk7s3fw, Institute of Industrial Relations, UC Berkeley.
  4. Reich, MIchael & Jacobs, Ken & Bernhardt, Annette, 2014. "Local Minimum Wage Laws: Impacts on Workers, Families and Businesses," Institute for Research on Labor and Employment, Working Paper Series, Institute of Industrial Relations, UC Berkeley qt9pf1225f, Institute of Industrial Relations, UC Berkeley.
  5. Allegretto, Sylvia A., 2013. "Waiting for Change: Is it Time to Increase the $2.13 Subminimum Wage?," Institute for Research on Labor and Employment, Working Paper Series, Institute of Industrial Relations, UC Berkeley qt3zx9v0zk, Institute of Industrial Relations, UC Berkeley.
  6. Dube, Arindrajit & Lester, T. William & Reich, Michael, 2013. "Minimum Wage Shocks, Employment Flows and Labor Market Frictions," Institute for Research on Labor and Employment, Working Paper Series, Institute of Industrial Relations, UC Berkeley qt27z0006g, Institute of Industrial Relations, UC Berkeley.
  7. Huang, Yi & Loungani, Prakash & Wang, Gewei, 2014. "Minimum wages and firm employment: evidence from China," Globalization and Monetary Policy Institute Working Paper 173, Federal Reserve Bank of Dallas.

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