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card_krueger - Introduction • Up to now – Focus has...

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1 1 Applications: Card and Krueger Using Statistics to Test Economic Hypotheses 2 Introduction Up to now Focus has been on acquiring technique End point – Constructing confidence intervals for means and difference in means Testing hypotheses These are basic tools in empirical analysis Used in all social and physical sciences Although basic, in many cases, just what is needed 3 Next few days Examine some simple yet important articles in applied economics Articles have similar characteristics Address interesting questions “Experiments” yield data that can test hypotheses with difference in means Not typical article -- most statistical tests economics are more sophisticated There are however illustrative of the types of questions that can be answered 4 What you should focus on? What is the economic question? – What is the null hypothesis? How is the data collected? What assumptions must be correct for the test to be an unbiased estimate of the “treatment” effect?
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2 5 Minimum wage laws Minimum wage laws imposed by state, local and Federal governments “covered” sector includes most jobs States/locals can raise but not lower Federal minimum wage Current Federal minimum wage, $5.15/hour 6 Some State Minimum Wage Laws • DE $6.15/hour • DC $6.15 • ME $6.25 • MA $6.75 • OR $6.50 • WA $6.90 7 W L W e W m L d L e L s S D 8 Textbook model of Minimum Wage Original conditions: W e , L e
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