A)
B) The result variable here is employment, the law was enforced in New Jersey when it was not enforced in Pennsylvania which is taken as New Jersey counterfactual. In order for the DID to retain its significance, it is necessary that the two countries act in the same way in terms of employment trends if the treatment is not provided i.e. employment trends NJ would have behaved in the same way as Pennsylvania in the lack of the minimum wage law.
C) The finding is inconsistent with a competitive labor market, as in a competitive labor market, rises in the minimum salary increase the downward demand curve for labor. This causes the reployment to drop. On the other side, the findings here are positive, which is improving jobs with the application of the minimum salary legislation.
2. Card and Krueger (1994) estimate the effects of minimum wage on employment of fast-food industry....
Card and Krueger (1994) consider the impact of New Jersey’s 1992 minimum wage increase from $4.25 to $5.05 per hour to understand whether higher minimum wage decreases employment level. They compare employment in 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the rise. Survey data on wages and employment from two waves: Wave 1: March 1992, one month before the minimum wage increase Wave 2: December 1992, eight months after increase are used. [5pts] What are...
2. In an industry, labour supply is E 10 + w and labour demand is E the level of employment and w is the hourly wage 60-4w, where E is a) What are the equilibrium wage and employment if the labour market is competitive? b) Suppose the government sets a minimum hourly wage of $12. How many workers would lose their jobs? How many additional workers would want a job at the minimum wage? What is the unemployment rate? c)...