ECO339H 2024/25

Take Home Assignment

Due: Saturday December 14, 2024 (11:00pm online)

In this assessment you have the opportunity to investigate the impact of the minimum wage on employment in Canada.  Your objective is to compose a short paper (2000 words maximum) describing your analysis.  Your paper should also include a maximum 4 figures plus tables (you can allocate within this total as you wish.  E.g., 3 figures and 1 table, or 2 figures and 2 tables, etc.). Finally, your paper should also include a list of references for any papers you cite, and in an appendix the STATA code you wrote to conduct your analysis (properly commented).  The figure(s), table(s), references and appendix do not count towards the 2000 word maximum.

You are being equipped with the data lfs0119rr.dta, which are in STATA format.  At least some of the variables in this data set should be useful to your analysis.  You may add variables to the data set if you wish (it is not required).   If you do, please properly report the source of the data you are adding.

The empirical frameworks we have discussed in class should be helpful (e.g., Difference-in-differences including its regression form, Instrumental variables etc.).  The textbook, the papers we will review in  class, and the additional papers referenced below should give you an idea of how to set up your empirical analysis.

Paper Format

The papers we have reviewed over the term provide good suggestions of how to format your paper. Many papers have the following sections:

1.   Introduction

2.   Past Research

3.   Empirical Framework

4.   Results

5.   Conclusions

Because you only have 2000 words total your sections will need to be concise.

Questions to Answer

Here are some questions that you should try to answer in your paper

a)   Given the data  provided, what types of workers work for low wages, including the minimum wage?

b)   Using the empirical framework you  have chosen, does your analysis suggest that increases in the minimum wage increase or decrease employment?

c)   How do your results compare to those in other research papers in terms of the size of the estimated effect and its sign?

Best Practices

There are also some best practices you should follow.  They include

1.   If you include a figure or table in your paper, be sure to discuss in the text.

2.   Precisely define and briefly justify each of the variables you include in your analysis.

3.   Present the equation you are estimating, and/or precisely describe the comparisons you are making.  Most word processing programs have an equation editor (e.g., see “ Insert”

“ Equation” in MS-Word) which should be useful for this propose.

4.   All figures and tables should have “Notes” and/or a Legend which describes their content.

Review the different academic papers we have reviewed in the course to see how your tables and figures should look.

5.   It’s often very effective if you can present your key empirical finding(s) graphically.  Recall the    tutorials investigating the impact of the Quebec Childcare Plan on mothers’ labour supply.  The graphs you constructed effectively told the same story that the regression analysis revealed.

Finally, your objective should be to describe your analysis in sufficient detail that if another researcher was equipped with your data, they could replicate your analysis.

Some Background Reading.

The relevant readings in the text are pages 207-216 (also see pages 200-204 as background).

One of the key researchers investigating the impact of minimum wages in Canada is Michele

Campolieti who is here at the University of Toronto.  A list of his publications can be found here:

https://discover.research.utoronto.ca/16438-michele-campolieti/publications

See for example his paper

Campolieti M, Gunderson M, Riddell C (2006) “ Minimum wage impacts from a prespecified research design: Canada 1981-1997”, Industrial Relations 45(2):195-216

For the US, David Card is a key researcher on the minimum wage and we will review some of his research in class.  Other important researchers are

Arindrajit Dube

https://arindube.com/published-articles-and-book-chapters/

Dube’s research uses empirical frameworks which are difficult to replicate in Canadian data (e.g., comparisons across state borders), nevertheless he is a leading proponent of the argument that   minimum wages do not have significant negative employment effects.  See, for example,

Sylvia Allegretto, Arindrajit Dube, Michael Reich and Ben Zipperer (2017) “Credible Research Designs for Minimum Wage Studies: A Response to Neumark, Salas and Wascher”  Industrial and Labor

Relations Review, 2017 (Vol. 70, Issue 3).

for his take on the proper specification of a employment/minimum wage regression models. A leading proponent on the other side of the debate is David Neumark

https://sites.socsci.uci.edu/~dneumark/research.html

See, for example, “ Employment Effects of Minimum Wages” David Neumark (IZA World of Labor) for an overview of the debate (and his strong conclusions!) and

Neumark, David, 2019, “The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns,” German Economic Review, 293-329

for a discussion of the various empirical frameworks researchers use to investigate the employment effects of the minimum wage.