Synthetic Control Estimation Beyond Comparative Case Studies

Does the Minimum Wage Reduce Employment?

Published in: Journal of Business & Economic Statistics (2021). doi: 10.1080/07350015.2021.1927743

Posted on RAND.org on October 01, 2021

by David Powell

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Panel data are often used in empirical work to account for fixed additive time and unit effects. The synthetic control estimator relaxes the assumption of additive fixed effects for comparative case studies in which a treated unit adopts a single policy. This article generalizes the synthetic control estimator to estimate parameters associated with multiple discrete or continuous explanatory variables, jointly estimating the parameters and synthetic controls for each unit. I apply the estimator to study the disemployment effects of the minimum wage, estimating that increases in the minimum wage reduce employment.

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