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This report suffers from a serious flaw: it uses federal minimum wage increases rather than state or local increases. By doing so, they have no control to compa

This report suffers from a serious flaw: it uses federal minimum wage increases rather than state or local increases. By doing so, they have no control to compare to and thus cannot show causation. For instance, suppose that federal min wage hikes only occur during periods of economic strength. It would seem that periods following min wage hikes have better outcomes than otherwise. However, the economic growth is not the cause of the economic strenfth but a response. The proper way to do min wgae testing is by comparing neighboring districts. If one county has a min wage hike its neighbors do not, then you can compare the outcomes of the affected county and use the other as a control. When this is done, the effects of min wage hikes become clear: in the short run, employees are not immediately fired because businesses stay open. However, in the long run, fewer employment opportunities are available. This suggests that in some areas, a min wage hike can cause disemployment effects over the long term [0] [0] http://voxeu.org/article/long-run-employment-effects-minimum-wage http://voxeu.org/article/long-run-employment-effects-minimum...

crdoconnor 9y ago
http://nelp.3cdn.net/98b449fce61fca7d43_j1m6iizwd.pdf http://nelp.3cdn.net/98b449fce61fca7d43_j1m6iizwd.pdf This has been done. Dube, Lester, Reich is a very rigorous study that compares all minimum wage increases across all state borders between 1990 and 2006. It controls for most things. No effect on employment was found, period.
- deleted 9y ago
  [deleted]
- jjoonathan 9y ago
  Also worth mentioning is the inverted funnel of Doucouliagos and Stanley, which suggests that there's considerable publication bias in favor of the traditional economic narrative. [1] Page 31 of https://pdfs.semanticscholar.org/49f8/49647aec895a598869113bb71e11cf34444c.pdf https://pdfs.semanticscholar.org/49f8/49647aec895a598869113b... [2] Annotated version of the key figure here: http://ethicussions.blogspot.com/2014/05/inequality-and-its-relevant-costs-to.html http://ethicussions.blogspot.com/2014/05/inequality-and-its-...
- trendia 9y ago
  Dube, Lester, Reich focused on the short run. The paper I linked (Sorkin) agreed with their findings in the short run > This short-run employment response is in line with both our estimates in this paper, as well as recent work studying the restaurant industry, such as Dube, Lester, and Reich (2010), Neumark, Salas, and Wascher (2014), and Allegretto et al. (2016) The disagreement is over the long run effects: > We find that the short-run employment effect captures only a small share of the long-run employment effect generated in the model. ... > much of the recent research suggesting that minimum wage hikes barely reduce the number of jobs in the short run should be taken with caution. The longer-run disemployment effects are potentially large. So when you say "no effect was found" it's because they were only looking in the short run.
  - crdoconnor 9y ago
    >Dube, Lester, Reich focused on the short run. Umm... no. From the abstract: >Our findings are robust to allowing for long-term effects of minimum wage changes Read the paper. Seriously.
    - fiter 9y ago
      That paper does not give a lot of motivation for why it uses the control that most strongly changes the results: heterogeneous (space) time variance. Why would it look like minimum wage increases decrease employment when considering US macroeconomic trends, but not when considering finer grained trends? If you increase your minimum wage you're losing out on employment compared to the US as a whole but locally there's no change in employment levels.
      - crdoconnor 9y ago
        It does give the motivation: "We show that this heterogeneity is spatial in nature. We also show that in the presence of such spatial heterogeneity, the precision of the individual case study estimates is overstated. By essentially pooling all such local comparisons and allowing for spatial autocorrelation, we address the dual problems of omitted variables bias and bias in the estimated standard errors"
- liamcardenas 9y ago
  > It controls for most things. I am not suggesting the results are one way or the other, but let's all keep in mind that given any statistical phenomenon, we can control for the change. i.e. if there is an increase in automation due to the minimum wage, which in turn displaces workers, a biased or naive researcher can "control for automation and technology trends"-- effectively eliminating the perceived effect of the price floor. I'm not saying that this is what is happening here, as I haven't read the studies, but I wouldn't be surprised if this were the case given that they are claiming the law of demand doesn't apply.

crdoconnor 9y ago

http://nelp.3cdn.net/98b449fce61fca7d43_j1m6iizwd.pdf http://nelp.3cdn.net/98b449fce61fca7d43_j1m6iizwd.pdf This has been done. Dube, Lester, Reich is a very rigorous study that compares all minimum wage increases across all state borders between 1990 and 2006. It controls for most things. No effect on employment was found, period.

deleted 9y ago
[deleted]
jjoonathan 9y ago
Also worth mentioning is the inverted funnel of Doucouliagos and Stanley, which suggests that there's considerable publication bias in favor of the traditional economic narrative. [1] Page 31 of https://pdfs.semanticscholar.org/49f8/49647aec895a598869113bb71e11cf34444c.pdf https://pdfs.semanticscholar.org/49f8/49647aec895a598869113b... [2] Annotated version of the key figure here: http://ethicussions.blogspot.com/2014/05/inequality-and-its-relevant-costs-to.html http://ethicussions.blogspot.com/2014/05/inequality-and-its-...
trendia 9y ago
Dube, Lester, Reich focused on the short run. The paper I linked (Sorkin) agreed with their findings in the short run > This short-run employment response is in line with both our estimates in this paper, as well as recent work studying the restaurant industry, such as Dube, Lester, and Reich (2010), Neumark, Salas, and Wascher (2014), and Allegretto et al. (2016) The disagreement is over the long run effects: > We find that the short-run employment effect captures only a small share of the long-run employment effect generated in the model. ... > much of the recent research suggesting that minimum wage hikes barely reduce the number of jobs in the short run should be taken with caution. The longer-run disemployment effects are potentially large. So when you say "no effect was found" it's because they were only looking in the short run.
- crdoconnor 9y ago
  >Dube, Lester, Reich focused on the short run. Umm... no. From the abstract: >Our findings are robust to allowing for long-term effects of minimum wage changes Read the paper. Seriously.
  - fiter 9y ago
    That paper does not give a lot of motivation for why it uses the control that most strongly changes the results: heterogeneous (space) time variance. Why would it look like minimum wage increases decrease employment when considering US macroeconomic trends, but not when considering finer grained trends? If you increase your minimum wage you're losing out on employment compared to the US as a whole but locally there's no change in employment levels.
    - crdoconnor 9y ago
      It does give the motivation: "We show that this heterogeneity is spatial in nature. We also show that in the presence of such spatial heterogeneity, the precision of the individual case study estimates is overstated. By essentially pooling all such local comparisons and allowing for spatial autocorrelation, we address the dual problems of omitted variables bias and bias in the estimated standard errors"
liamcardenas 9y ago
> It controls for most things. I am not suggesting the results are one way or the other, but let's all keep in mind that given any statistical phenomenon, we can control for the change. i.e. if there is an increase in automation due to the minimum wage, which in turn displaces workers, a biased or naive researcher can "control for automation and technology trends"-- effectively eliminating the perceived effect of the price floor. I'm not saying that this is what is happening here, as I haven't read the studies, but I wouldn't be surprised if this were the case given that they are claiming the law of demand doesn't apply.