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Identifying the Components of a Natural Experiment
An economist wants to study the effect of minimum wage increases on employment levels for low-wage workers. They identify two neighboring states, State A and State B, which have very similar economic conditions and demographics. A new law is passed that unexpectedly raises the minimum wage in State A, while the minimum wage in State B remains unchanged. The economist plans to compare employment changes in border counties of both states before and after the law change. Explain why this research setup can be considered a natural experiment. In your answer, identify the 'treatment' and 'control' groups and the key assumption that must hold for the results to be valid.
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Economy
CORE Econ
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Empirical Science
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
Cognitive Psychology
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Identifying the Components of a Natural Experiment
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