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Title:Sharpening the effectiveness of natural experiments as an analytical tool PDF Logo
Authors:Duleep, Harriet Orcutt
Issue Date:2012
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6682
Abstract:The importance of using natural experiments in economic research has long been recognized. Yet, it is only in recent years that natural experiments have become an integral part of the economist's analytical toolbox, thanks to the efforts of Meyer, Card, Peters, Krueger, Gruber, and others. This use promises to shed new light on a variety of public policy issues and has already caused a major challenge to some tightly held beliefs in economics, most vividly illustrated by the finding of a positive effect of a minimum wage increase on the employment of low-wage workers. Although currently in vogue in economic research, the analysis of natural experiments could be substantially strengthened. This paper discusses several methodological approaches that would increase the precision and reliability of the results stemming from the analysis of natural experiments. A theme underlying all of these proposals is how best to measure the effect of a treatment on a variable, as opposed to explaining a level or change in a variable.
Subjects:natural experiments
regression format
treatment effect
precision
extraneous group-specific effects
minimum wage
divorce laws
military service
Julian Simon
JEL:J08
J18
J38
J48
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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