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Does regional variation in wage levels identify the effects of a national minimum wage?

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  • Daniel Haanwinckel

Abstract

I evaluate the performance of estimators that exploit regional variation in wage levels to identify the employment and wage effects of national minimum wage laws. For the "effective minimum wage" design, I show that the identification assumptions in Lee (1999) are difficult to satisfy in settings without regional minimum wages. For the "fraction affected" design, I show that economic factors such as skill-biased technical change or regional convergence may cause parallel trends violations and should be investigated using pre-treatment data. I also show that this design is subject to misspecification biases that are not easily solved with changes in specification.

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  • Daniel Haanwinckel, 2023. "Does regional variation in wage levels identify the effects of a national minimum wage?," Papers 2307.01284, arXiv.org, revised May 2024.
    • Handle: RePEc:arx:papers:2307.01284
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    References listed on IDEAS

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