A Study, Published in 1993, Used U Where E Is the Employment to Population Ratio of Teenagers

question 40

Essay

A study, published in 1993, used U.S.state panel data to investigate the relationship
between minimum wages and employment of teenagers.The sample period was 1977 to
1989 for all 50 states.The author estimated a model of the following type: $$\ln \left( E _ { i t } \right) = \beta _ { 0 } + \beta _ { 1 } \ln \left( M _ { i t } / W _ { i t } \right) + \gamma _ { 2 } D 2 _ { i } + \ldots + \gamma _ { n } D 50 _ { i } + \delta _ { 2 } B 2 _ { t } + \ldots + \delta _ { \mathrm { T } } B 13 _ { \mathrm { t } } + u _ { i t }$$ where E is the employment to population ratio of teenagers, M is the nominal minimum
wage, and W is average hourly earnings in manufacturing.In addition, other explanatory
variables, such as the adult unemployment rate, the teenage population share, and the
teenage enrollment rate in school, were included.
(a)Name some of the factors that might be picked up by time and state fixed effects.