Friday, January 24, 2014

Neumark, Salas, and Wascher Request

If anyone knows the Neumark, Salas, and Wascher critique of the contiguous counties approach as well as the Dube et al. response well and wants to write up a guest post, I'd be interested in hearing from you. I haven't gotten to these papers in my recent push to familiarize myself with the literature and am afraid I might not. But it's clearly important. As my last post suggests, I think the spatial heterogeneity point looms over all the other issues in this debate, so if it's poorly dealt with that matters.

I suspect it's not - I kind of got a sense of Dube et al.'s response to Neumark, Salas, and Wascher in one of their responses to Meer and West. But I'd be interested in hearing from someone that's done a closer reading.

Without dealing with that I really don't see where the model identification is. Without the county match you've really just got a fixed effects model that you're trying to pretend has the identification properties of a DID. Right?

1 comment:

  1. My admittedly naive understanding of the two papers (high-level technical econometrics makes my eyes go all googly but I can understand the text pretty well):

    NSW: A higher minimum wage represents a trade-off between higher wages for some and disemployment for others. The two effects are related in their impact, when you see a large increase in wages following a minimum wage increase, you also see a large disemployment effect. When you see a negligible change in wages, you see only a negligible change in employment. A lot of the studies (Dube et al, for example they name specifically) show the latter.

    Dube et al: There is no reasonable explanation for why there would not be significant discontinuity created by a state border when the minimum wage is increased, therefore NSW must have made a mistake in the continuity estimates, but we can't seem to find it. Nonetheless, if you assume that our methodology captures a wage discontinuity they way it's supposed to, there is no significant disemployment effect.

    I've read the Dube et al response multiple times trying to understand why it's not terrible, and I cannot figure that part out.


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