Sabia Minimum Wage

Several studies try to examine the relationship between minimum wage and employment. Sabia et al. (2012) was interest in this topic and understood that previous studies have flaws. They tried to do something different by employing a synthetic control design. They were the first in literature to use this type of design for minimum wage. Based on evidence found from other literatures, economic theory suggests that minimum wage increases result in an adverse employment effect. However, the authors stated that there are case studies from other literatures prove this otherwise. Hence, Sabia et al. (2012) re-examined this topic and conducted their research using the data from the New York State. Their research question is “Are the effects of minimum wage increases always small?”. They hypothesized that minimum wage increases will have a small effect on employment. …show more content…
(2012) mentioned the usage of panel data techniques. The results from those studies contain flaws from the unobserved state-specific employment trends. When control for area-specific was included, there was little evidence to support the adverse employment effects in the low-skilled retail and restaurant sectors. Another study took a different approach and used a repeated cross-section of counties. The result of this study showed a small insignificant effect on employment for teens, but larger adverse employment effects when minimum wage was binding. The authors found out about how the binding could understate adverse employment effects if it addresses a group incorrectly. Furthermore, there are other studies that use difference-in-difference identification strategy. The study used control state and found evidence for positive employment effects. But when it was used by other researchers, it showed no evidence to support