Ben Zipperer

Credible Research Designs for Minimum Wage Studies

The authors assess the critique by Neumark, Salas, and Wascher (2014) of minimum wage studies that found small effects on teen employment. Data from 1979 to 2014 contradict NSW; the authors show that the disemployment suggested by a model assuming parallel trends across U.S. states mostly reflects differential pre-existing trends. A data-driven LASSO procedure that optimally corrects for state trends produces a small employment elasticity (–0.01). Even a highly sparse model rules out substantial disemployment effects, contrary to NSW’s claim that the authors discard too much information. Synthetic controls do place more weight on nearby states—confirming the value of regional controls—and generate an elasticity of −0.04. A similar elasticity (−0.06) obtains from a design comparing contiguous border counties, which the authors show to be good controls. NSW’s preferred matching estimates mix treatment and control units, obtain poor matches, and find the highest employment declines where the relative minimum wage falls. These findings refute NSW’s key claims.

Is the United States a Good Model for Reducing Social Exclusion in Europe

Advocates of U.S.-style labor market flexibility have long argued that Europe could generate jobs and lower unemployment if the continents economies followed the example of the United States. More recently, proponents of the U.S. model have suggested that labor market deregulation also holds out the possibility of reducing the problem of “social exclusion” in Europe, primarily because unemployment is one of the worst forms of social exclusion and contributes to other forms of social marginalization. The authors review a broad range of social and economic indicators and conclude that the United States fares poorly compared with much of Europe on social measures. Meanwhile, U.S.-style flexibility has had only mixed success in improving employment outcomes, and the U.S. economy consistently provides lower levels of economic mobility than economies in Europe.