Question: 14. You are interested in examining whether changes in the minimum wage influence youth employment. You gather data on youth employment for Ontario and Quebec

14. You are interested in examining whether changes in the minimum wage influence youth employment. You gather data on youth employment for Ontario and Quebec in the years 2015 and 2018. The following table displays the share of youths who are working: Ontario Quebec 2015 0.45 0.37 2018 0.42 0.38 a) Use this data to construct the difference-in-differences estimator assuming there was an increase in the minimum wage in Ontario in 2016 and no change in Quebec. [1 mark] h) Suppose you also collected data for each province in 2012 and youth employment was 0.47 in Ontario and 0.36 in Quebec in 2012. Does this suggest that the key assumption for the difference-in-differences estimator to be unbiased is true in this situation? Explain why or why not. Assume there was no change in the minimum wage in either province between 2012 and 2015. [3 marks]
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