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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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  • Olli Ropponen, 2011. "Reconciling the evidence of Card and Krueger (1994) and Neumark and Wascher (2000)," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(6), pages 1051-1057, September.
    • Handle: RePEc:wly:japmet:v:26:y:2011:i:6:p:1051-1057
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    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    2. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, December.
    3. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
    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.
    5. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    6. Stephen Machin & Alan Manning, 1994. "The Effects of Minimum Wages on Wage Dispersion and Employment: Evidence from the U.K. Wages Councils," ILR Review, Cornell University, ILR School, vol. 47(2), pages 319-329, January.
    7. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
    8. Yatchew,Adonis, 2003. "Semiparametric Regression for the Applied Econometrician," Cambridge Books, Cambridge University Press, number 9780521812832, January.
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    Cited by:

    1. Olli Ropponen, 2014. "A note on the robustness of Card and Krueger (1994) and Neumark and Wascher (2000)," Empirical Economics, Springer, vol. 46(1), pages 307-316, February.
    2. Bruce G. Carruthers & Naomi R. Lamoreaux, 2016. "Regulatory Races: The Effects of Jurisdictional Competition on Regulatory Standards," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 52-97, March.
    3. Marius Berger & Bruno Lanz, 2020. "Minimum wage regulation in Switzerland: survey evidence for restaurants in the canton of Neuchâtel," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 156(1), pages 1-23, December.
    4. Riley, Rebecca & Rosazza Bondibene, Chiara, 2017. "Raising the standard: Minimum wages and firm productivity," Labour Economics, Elsevier, vol. 44(C), pages 27-50.
    5. William Torous & Florian Gunsilius & Philippe Rigollet, 2021. "An Optimal Transport Approach to Estimating Causal Effects via Nonlinear Difference-in-Differences," Papers 2108.05858, arXiv.org, revised Mar 2024.
    6. Emre Akgunduz & Egbert Jongen & Paul P.M. Leseman & Janneke Plantenga, 2015. "Quasi-experimental evidence on the relation between child care subsidies and child care quality," CPB Discussion Paper 310, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Emre Akgunduz & Egbert Jongen & Paul P.M. Leseman & Janneke Plantenga, 2015. "Quasi-experimental evidence on the relation between child care subsidies and child care quality," CPB Discussion Paper 310.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Eerola, Essi & Lyytikäinen, Teemu, 2015. "On the role of public price information in housing markets," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 74-84.
    9. Florian Gunsilius, 2020. "Distributional synthetic controls," Papers 2001.06118, arXiv.org, revised Dec 2021.
    10. F. F. Gunsilius, 2023. "Distributional Synthetic Controls," Econometrica, Econometric Society, vol. 91(3), pages 1105-1117, May.
    11. Y.E. Akgündüz & E. Jongen & Paul P M Leseman & J. Plantenga, 2015. "Quasi-experimental evidenceon the relationbetween child care subsidiesand child care quality," Working Papers 15-08, Utrecht School of Economics.

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