A Natural Experiment That Challenged Conventional Economic Theory
Keywords:
Minimum wage,employment,Difference-in-Differences (DiD),natural experiment,labor economics,policy evaluation.Abstract
This article examines the influential study by David Card and Alan Krueger (1994), which investigates the impact of minimum wage increases on employment in the fast food industry. Using a natural experiment created by a policy change in New Jersey and a comparison with Pennsylvania, the authors apply the Difference-in-Differences (DiD) method to estimate causal effects. Contrary to traditional economic theory, the study finds no evidence of employment decline; instead, results suggest a slight increase in employment
References
1.Card, D., & Krueger, A. B. (1994). Minimum wages and employment: A case study of the fast-food industry in New Jersey and Pennsylvania. American Economic Review, 84(4), 772–793.
2.Card, D., & Krueger, A. B. (1995). Myth and measurement: The new economics of the minimum wage. Princeton University Press.
3.Neumark, D., & Wascher, W. (2000). Minimum wages and employment: A case study of the fast-food industry in New Jersey and Pennsylvania: Comment. American Economic Review, 90(5), 1362–1396.
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