Credible Research Designs for Minimum Wage Studies

81 Pages Posted: 5 Oct 2013

See all articles by Sylvia A. Allegretto

Sylvia A. Allegretto

University of Colorado at Boulder - Department of Economics

Arindrajit Dube

University of California, Berkeley - Institute for Research on Labor and Employment

Michael Reich

University of California, Berkeley - Department of Economics

Ben Zipperer

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.

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

JEL Classification: J08, J23, J38, J42, J63, J64

Suggested Citation

Allegretto, Sylvia A. and Dube, Arindrajit and Reich, Michael and Zipperer, Ben, Credible Research Designs for Minimum Wage Studies. IZA Discussion Paper No. 7638. Available at SSRN: https://ssrn.com/abstract=2336435

Sylvia A. Allegretto (Contact Author)

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309-0256
United States

Arindrajit Dube

University of California, Berkeley - Institute for Research on Labor and Employment ( email )

2521 Channing Way #5555
Berkeley, CA 94720
United States
510-642-9951 (Phone)

HOME PAGE: http://www.irle.berkeley.edu/cwed/dube.html

Michael Reich

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-643-7079 (Phone)
510-642-6432 (Fax)

Ben Zipperer

University of Massachusetts Amherst ( email )

Department of Operations and Information Managemen
Amherst, MA 01003
United States

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