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Reconciling the evidence of Card and Krueger (1994) and Neumark and Wascher (2000)
Author(s) -
Ropponen Olli
Publication year - 2011
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.1258
Subject(s) - economics , estimator , econometrics , demographic economics , statistics , mathematics
We employ the original Card and Krueger ( American Economic Review 1994; 84: 772–793) and Neumark and Wascher ( American Economic Review 2000; 90: 1362–1396) data together with the changes‐in‐changes estimator to re‐examine the evidence for 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. Copyright © 2011 John Wiley & Sons, Ltd.