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When Good Measurement Goes Wrong

Author

Listed:
  • Joseph J. Sabia
  • Richard V. Burkhauser
  • Benjamin Hansen

Abstract

Hoffman’s (2015) replication of Sabia, Burkhauser, and Hansen (SBH 2012) suggests that “unlucky†measurement error in low-skilled employment in the Current Population Survey Outgoing Rotation Groups (CPS-ORG) led SBH to produce upwardly biased estimates of the labor demand effects of the 2005 to 2006 New York State minimum wage increase. This study replicates Hoffman’s preferred policy estimates from the full CPS and finds evidence that the parallel trends assumption underlying his difference-in-difference approach is violated. When a synthetic control state with pretreatment employment trends similar to those in New York is constructed, this study estimates a relatively large negative employment elasticity with respect to the minimum wage for low-skilled individuals (–0.5), similar to the estimate SBH obtained using the CPS-ORG (–0.6).

Suggested Citation

  • Joseph J. Sabia & Richard V. Burkhauser & Benjamin Hansen, 2016. "When Good Measurement Goes Wrong," ILR Review, Cornell University, ILR School, vol. 69(2), pages 312-319, March.
    • Handle: RePEc:sae:ilrrev:v:69:y:2016:i:2:p:312-319
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    Citations

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    Cited by:

    1. Wiljan van den Berge, 2021. "The Young Bunch: Youth Minimum Wages and Labor Market Outcomes," CPB Discussion Paper 422.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Taryn W. Morrissey, 2023. "The minimum wage and parent time use," Review of Economics of the Household, Springer, vol. 21(3), pages 1043-1062, September.
    3. Emiel van Bezooijen & Wiljan van den Berge & Anna Salomons, 2024. "The Young Bunch: Youth Minimum Wages and Labor Market Outcomes," ILR Review, Cornell University, ILR School, vol. 77(3), pages 428-460, May.
    4. McGuinness, Seamus & Redmond, Paul & Delaney, Judith, 2019. "The prevalence and effect on hours worked of the minimum wage in Ireland: A sectoral and regional analysis," Research Series, Economic and Social Research Institute (ESRI), number RS93.
    5. Filiz Gülal & Adam Ayaita, 2020. "The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-experiment in Germany," Journal of Happiness Studies, Springer, vol. 21(7), pages 2669-2692, October.
    6. Jeffrey Clemens & Michael R. Strain, 2017. "Estimating the Employment Effects of Recent Minimum Wage Changes: Early Evidence, an Interpretative Framework, and a Pre-Commitment to Future Analysis," NBER Working Papers 23084, National Bureau of Economic Research, Inc.
    7. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    8. SATO Kazuma, 2021. "The Impact of the Minimum Wage Increase on Subjective Wellbeing: Evidence from Japan," Discussion papers 21075, Research Institute of Economy, Trade and Industry (RIETI).

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