For this particular research, Card and Kruger examined 410 fast food restaurants in New Jersey and Pennsylvania, the latter being the control group. New Jersey was the treatment group, as that city saw an increase in the minimum wage from $4.25 to $5.05 on April 1st, 1992. A comparison of employment, wages, and store prices was done for both states before and after the minimum wage increase to evaluate the impact of the new law. The authors stated the following as five reasons for selecting the fast food industry as the unit of analysis: major employer of low wage workers, comply with minimum wage regulations, homogeneous job requirements and products, convenient sample frame, high response rates to telephone surveys.
Surveys were conducted in two waves, before the wage increase (February to March 1992) – wave 1 and after (November to December 1992) – wave 2. Overall, response rates for both waves of the telephone surveys were high, 87 percent wave 1 and 99.8 percent wave 2. All stores contacted in wave one were contacted in wave 2 (telephone or face to face interviews), however, the stores that were no longer operating were coded as 0 (permanently closed) or missing data (temporarily closed). Data for the following key variables were initially observed: store...
... middle of paper ...
...fore and after the minimum wage increase (time series). This is an example of a quasi experiment in that there was a control group, Pennsylvania and a treatment group, New Jersey. There was also a somewhat unexpected change, the increase in minimum wages from $4.25 to $5.05, which was large enough to be measured.
Details of Regression Model
As per Adkins and Hill (p. 237)
δ = (Ĉ – Ê) – (B – Â)
(Treatment after – Control after) – (Treatment before – Control before)
(21.02734 – 21.16558) − (20.43941 – 23.33117) = 2.7536
Interaction term δ = 2.7536*
y ii =β1 + β2TREAT1 + β3AFTER1 + δ(TREAT1×AFTER1)+e ii
= 23.23 + 20.44 + 21.03 + 2.75(20.44×21.03) + e ii
* Coefficient (treatment effect) was not statistically significant but demonstrated a positive effect, which was found to be contrary to what the conventional economic model would predict (STATA output).
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- The idea of having a federal minimum wage is a good one. The idea is to protect low and unskilled workers from discrimination and allow all workers to earn a living wage. The recent debate on the floor, though, is whether or not to raise the minimum wage from the current $7.25 per hour up to $10.10 per hour. President Barack Obama made this proposal during his annual State of the Union Address on January 28, and following this there were many hot debates about it. The debates focused not only on the advantages and the disadvantages of increasing the minimum wage, but also the alternatives to increasing it.... [tags: federal minimun wage, unskilled workers, wage]
987 words (2.8 pages)
- Introduction Minimum wage was established state wide in 1938 by Franklin Delano Roosevelt; at that time it was only 25 cents which is equivalent to 4 dollars in today’s world. It was established as part of the Fair Labor Standards Act which covered youth, government and overtime pay. Massachusetts was actually the first state before Franklin’s statewide acknowledgement, and it only covered woman and children without overtime. There are lot of issues with minimum wage now such as setting a statewide minimum wage to $10.10, which does not benefit places were living is expensive such as in New York.... [tags: Minimum wage, Employment, Wage]
2449 words (7 pages)
- Increasing the minimum wage has always been a very controversial topic because many people are unsure of how it will effect society. One of the main concerns is its effect on jobs. According to most economists there is no “free lunch” meaning something has to be done to pay for the cost of increasing wages (Wilson). Most companies will not just take the hit and accept reduced profits. Instead companies will find other ways to makeup for their loss like decreasing the amount of employees. With information limited to two opposing opinionated articles, a novice can conjecture increasing minimum wage does not significantly decrease the amount of jobs.... [tags: Minimum wage, Employment, Wage, Wage labour]
1429 words (4.1 pages)
- As of February 2014, there are approximately 155 million civilians in the United States work force (The Employment Situation). President Barack Obama addressed the many individuals and their families who are working full-time under the federal minimum wage, yet still classified as poverty, in his annual 2014 State of the Union speech. Even with a minimum wage established by the federal government, working class civilians under the federal minimum wage of $7.25 are struggling with day to day life, which includes mortgage payments, food expenses, child expenses, and higher education expenses.... [tags: Minimum wage, Employment, Barack Obama]
1933 words (5.5 pages)
- The Risk of Raising Minimum wage Raising minimum wage may seem like it will be good for society, but it will do more harm than good. Every time there has been an increase in minimum wage, there was also an increase in the unemployment rate (Jaarda 1). The people who are being affected the most are teenagers and young adults who are usually identified in the work force as “unskilled” workers. The main reason is because some businesses cannot afford to hire unskilled workers with an increasing minimum wage.... [tags: Employment, Minimum wage, Wage, Unemployment]
1220 words (3.5 pages)
- In Canada, minimum wage falls under provincial jurisdiction resulting in the floor varying across provinces, which makes Canada a suitable country for stakeholders to draw comparisons and recognise minimum wage effects (Campolieti, Gunderson & Lee, 2012, p. 287). One of the key motivators in government increasing minimum wage through legislation, is to reduce poverty in the country. This reason stems from the idea that increasing low-skilled worker’s wages will result in an increase in low-skilled worker’s income and give them greater purchasing power (Campolieti, Gunderson & Lee, 2012, p.... [tags: Minimum wage, Employment, Unemployment, Wage]
1066 words (3 pages)
- Karl Marx’ capitalism theory goes hand in hand with the minimum wage issue. Declining wages and growing inequality are the world’s central economic challenges. In modern day America, where the cost of living is constantly on a gradual increase, the question arises: Should the minimum wage be increased. After doing some research, reading works by authors such as: Jordan Weissmann, Jared Bernstein, and Brad Plumer. I have come to the conclusion that, although increasing the minimum wage will have various effects on diverse demographics, increasing the minimum wage will ultimately benefit our nation.... [tags: Wage, Working class, Minimum wage, Employment]
802 words (2.3 pages)
- Minimum wage is the lowest wage an employer can pay their employees. There is a Federal minimum wage and in some cases a State Minimum wage. The current Federal minimum wage is $7.25. An employee who makes $7.25 an hour and works 40 hours a week, will earn about $14,000 per year. The Federal government deemed that the poverty line is anyone who makes less than $17,000 a year (“Federal Minimum”). Therefore anyone that makes minimum wage lives below the poverty line. As president Obama said in his state of address, "In the wealthiest nation on earth, no one who works full-time should have to live in poverty” (“Federal Minimum”).... [tags: Increase Minimum Wage Essays]
1609 words (4.6 pages)
- The minimum wage established in 1938, under the Fair Labor Standards Act; the purpose was to establish a standard wage that employers cannot decrease and to help alleviate poverty. In 1938, the minimum wage was set as $0.25 an hour and as of 2009 the minimum wage is $7.25 an hour. Although recently in the past few years, many corporations have raised their minimum wage to $9.00 and even up to $10.10 an hour. Now, much of society is pushing for an established minimum wage of $15.00 an hour by 2020.... [tags: Employment, Minimum wage, Wage, Wage labour]
2004 words (5.7 pages)
- “An increase in the minimum wage will boost income for the poorest workers without the danger of creating more unemployment.”, stated President Obama in September 2014. Is this statement about an increase in minimum wage really true. There are two sides to the debate about minimum wage. The minimum wage is a major issue in the world of economics and politics. Political figures often prey on the public’s general ignorance of economics and promise to increase the minimum wage. Economists, on the other hand, view the long term effects and see the damage it can cause.... [tags: Argumentative Essay, Minimum Wage Essays]
476 words (1.4 pages)