An econometric study using the difference-in-differences technique finds no significant employment effect from a minimum-wage hike. Which evidence most strengthens this finding?
Show Hint
- Some firms in the treated region reported difficulty in hiring, even though aggregate employment did not change significantly.
- Overall labour costs increased slightly in the treated region, but wages for most workers remained unchanged.
- Employment trends in similar regions without a minimum wage hike were nearly identical to the trends in regions with the hike before and after the policy change.
- Workers' hours declined in certain industries, despite stable employment levels.
The Correct Option is C
Solution and Explanation
Step 2: Strengthening evidence — Evidence that trends in untreated regions are nearly identical before and after the hike supports the finding that the minimum wage did not significantly affect employment.
Step 3: Evaluate options — (a) Only anecdotal and does not confirm overall trends.
(b) Wages unchanged → not directly related to employment.
(c) Provides direct comparison supporting the null effect.
(d) Hours changes indicate partial adjustments, not overall employment.
Step 4: Conclusion — Option (c) is correct.
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