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.

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Definitions:

Social Cooperative

A group or organization that operates on the principles of mutual assistance and collaboration among its members for a common goal.

Aggressive Outbursts

Aggressive outbursts are sudden, intense expressions of anger or violence that can result from frustration, certain psychological conditions, or emotional distress.

Frustration-aggression Principle

A theory suggesting that frustration leads to aggressive behavior, as aggression is seen as a means to eliminate the source of frustration.

Social Traps

Scenarios where a group or individual acts in their short-term interest, leading to a worse outcome for everyone in the long term.