Credible Research Designs for Minimum Wage Studies

By Sylvia A. Allegretto, Arindrajit Dubé, M. Reich, Ben Zipperer. Social Science Research Network, 2013

216 citations recorded by the source corpus.

The authors assess the critique by Neumark, Salas, and Wascher (2014) of minimum wage studies that found small effects on teen employment. Data from 1979 to 2014 contradict NSW; the authors show that the disemployment suggested by a model assuming parallel trends across U.S. states mostly reflects differential pre-existing trends. A data-driven LASSO procedure that optimally corrects for state trends produces a small employment elasticity (–0.01). Even a highly sparse model rules out substantial disemployment effects, contrary to NSW’s claim that the authors discard too much information. Synthetic controls do place more weight on nearby states—confirming the value of regional controls—and generate an elasticity of −0.04. A similar elasticity (−0.06) obtains from a design comparing contiguous border counties, which the authors show to be good controls. NSW’s preferred matching estimates mix treatment and control units, obtain poor matches, and find the highest employment declines where the relative minimum wage falls. These findings refute NSW’s key claims.

Subfields: Economics and Econometrics, Gender Studies, General Health Professions

View Paper: https://www.semanticscholar.org/paper/422187a6c6e4e86203774c8aeb82d5154390a74a

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Citations in the corpus

The Effect of Minimum Wages on Low-Wage Jobs* (2019, background): “…a unified theoretical framework is beyond the scope of this article, ing 1990–1991 is also responsible for the sensitivity of teen employment estimates to specification that has plagued the literature, such as controls for trends (e.g., Neumark, Salas, and Wascher 2014; Allegretto et al. 2017).”
Minimum Wages and Racial Inequality* (2020, background): “By contrast, prior literature has focused on strongly affected subgroups, such as teens, or workers in specific industries, typically restaurants (Abowd et al. 2000; Neumark, Salas, and Wascher 2014; Allegretto et al. 2017).”
Minimum Wage Shocks, Employment Flows, and Labor Market Frictions (2012, methodology): “We respond further in Allegretto et al. (2013).”
Pre-Event Trends in the Panel Event-Study Design (2019, methodology): “There is an ongoing debate about the effect of the minimum wage on youth employment (Neumark et al. 2014; Allegretto et al. 2017).”
Minimum Wages and the Distribution of Family Incomes (2018, unknown): “As shown in Allegretto et al. (2013), high- versus low-minimum wage states over this period are highly spatially clustered, and tend be di er in terms of growth in income inequality and job polarization, and the severity of business cycles.”