Your textbook gives a graphical example of ,where outcome is plotted on the vertical axis,and time period appears on the horizontal axis.There are two time periods entered: "t = 1"
and "t = 2." The former corresponds to the "before" time period,while the latter represents the "after" period.The assumption is that the policy occurred sometime between the time periods (call this "t = p").Keeping in mind the graphical example of ,carefully read what a reviewer of the Card and Krueger (CK)study of the minimum wage effect on employment in the New Jersey-Pennsylvania study had to say:
"Two assumptions are implicit throughout the evaluation of the 'natural experiment:' (1)[ ] would be zero if the treatment had not occurred,so a nonzero [
] indicates the effect of the treatment (that is,nothing else could have caused the difference in the outcomes to change),and (2)… the intervention occurs after we measure the initial outcomes in the two groups.… Three conditions are particularly relevant in interpreting CK's work: (1)[t = 1] must be sufficiently before [t = p] that [the treatment group] did not adjust to the treatment before [t=1] - otherwise [
-
] will reflect the effect of the treatment; (2)[t = 2] must be sufficiently after [t = p] to allow the treatment's effect to be fully felt;and (3)we must be sure that the same difference [
-
] would have been observed at [t = 2] if the treatment had not been imposed,that is,[the control group must be good enough] that there is no need to adjust the differences for factors other than the treatment that might have caused them to change."
Use a figure similar to the textbook to explain what this reviewer meant.
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q32: Canada and the United States had approximately
Q41: To analyze the effect of a minimum
Q42: The New Jersey-Pennsylvania study on the effect
Q42: Consider the simple population regression model where
Q45: Let the vertical axis of a figure
Q45: Present alternative estimators for causal effects using
Q46: (Requires Appendix material)Discuss how the differences-in-differences estimator
Q48: Specify the multiple regression model that contains
Q48: Your textbook mentions use of a quasi-experiment
Q49: Define the
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents