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

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  • Ropponen, Olli

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.

Suggested Citation

  • Ropponen, Olli, 2011. "Reconciling the evidence of Card and Krueger (1994) and Neumark and Wascher (2000)," Working Papers 24, VATT Institute for Economic Research.
  • Handle: RePEc:fer:wpaper:24
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    File URL: https://www.doria.fi/handle/10024/148763
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    References listed on IDEAS

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    1. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, January.
    2. Stephen Machin & Alan Manning, 1992. "Minimum Wages," CEP Discussion Papers dp0080, Centre for Economic Performance, LSE.
    3. 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.
    4. 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.
    5. Yatchew,Adonis, 2003. "Semiparametric Regression for the Applied Econometrician," Cambridge Books, Cambridge University Press, number 9780521812832.
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    Citations

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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. 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.
    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. 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.
    6. 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.

    More about this item

    Keywords

    CIC estimator; employment; minimum wage; nonlinear treatment effect models; Labour market; Työmarkkinat; Taxation and Social Transfers; Julkisen talouden rahoitus ja tulonsiirrot; C210 - Econometric Methods: Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; J230 - Employment Determination; Job Creation; Demand for Labor; Self-Employment; J380 - Wages; Compensation; and Labor Costs: Public Policy (wage subsidies; minimum wage legislation);

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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