On Tue, 3 Oct 2000, Alex Tabarrok wrote:
> If Card/Krueger is such a bad study where is the locus classicus of a
> reply? I have heard for years of a Finis Welch reply but have never
> seen anything published. Where indeed is the reply to their book which
> includes a lot more questioning the miniumum wage than their paper?
The paper I obliquely referred to yesterday is:
Kennan, J. (1995) "The Elusive Effects of the Minimum Wage," JEL 33:4.
There's also a whole sequence of papers by Neumark and Wescher.
However, if I recall correctly, Card and Krueger published a later piece
(circa 1998?) that addressed many of the points critics brought up.
The key critical point, in my mind anyways, is that they didn't find
that the minimum wage increased employment. They found is had no effect,
whereas in the "control" State employment increased. If there are
unobserved differences between the two States, that would reconcile
the result and suggest the effect of the minimum wage was small, rather
than positive. The other point is that, essentially, n=2 -- despite
the fact there are lots of restaurants, they aren't really using any
more information than is in aggregate employment in the two States
before and after the minimum wage change. Large panel studies, while
having other problems, tend to find small negative effects on
employment.
> I don't happen to believe their result (and where I was educated (and
> Bryan teaches) Card and Kruger are known as "whores for the political
> classes" ).
"whores for the political classes" ??? Care to elaborate?
> Card and Krueger is indeed an original and clever study and if it had
Well, Kennan points out that a very similar study was published
in 1915.
None of this should be taken to infer that I think Card and Krueger
deserve the derision that another list member has poured on them. I
don't, however, think they gave us compelling evidence demonstrating
perverse effects of minimum wages.
Chris Auld (403)220-4098
Economics, University of Calgary <mailto:[EMAIL PROTECTED]>
Calgary, Alberta, Canada <URL:http://jerry.ss.ucalgary.ca/>
