Two Authors Published a Study in 1992 of the Effect

question 15

Essay

Two authors published a study in 1992 of the effect of minimum wages on teenage
employment using a U.S.state panel.The paper used annual observations for the years
1977-1989 and included all 50 states plus the District of Columbia.The estimated
equation is of the following type $$E _ { i t } = \beta _ { 0 } + \beta _ { 1 } \left( M _ { i t } / W _ { i t } \right) + \gamma _ { 2 } D 2 _ { i } + \ldots + \gamma _ { n } D 51 _ { i } + \delta _ { 2 } B 2 _ { t } + \ldots + \delta _ { \mathrm { T } } \mathrm { B } 13 _ { \mathrm { t } } + u _ { i t }$$ where E is the employment to population ratio of teenagers, M is the nominal minimum
wage, and W is average wage in the state.In addition, other explanatory variables, such
as the prime-age male unemployment rate, and the teenage population share were
included.
(a)Briefly discuss the advantage of using panel data in this situation rather than pure cross
sections or time series.

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Definitions:

Cognitive Development

The process by which individuals acquire and understand knowledge, form concepts, solve problems, and gain insights.

Conventional Level

Kohlberg’s second level of moral development, in which right and wrong are based on the internalized standards of others; “right” is whatever helps or is approved of by others, or whatever is consistent with the laws of society.

Maintaining Social

The act of preserving social relationships and networks through communication and activities that foster connections.

Conventional Level

A stage in Kohlberg's theory of moral development where an individual's moral reasoning is based on conforming to social rules and expectations.