Manitoba and Saskatchewan have similar provincial minimum wagesaround $11.75 per hour. Suppose in 2021, Manitoba lowers itsminimum wage to $10 per hour while Saskatchewan’s minimum wage doesnot change. We observe from survey data that average annual hoursamong workers with less than high school education is 1532 hours inManitoba in 2020 and 1520 in Saskatchewan in 2020, then 1515 inManitoba in 2022 and 1635 in Saskatchewan in 2022. From thisinformation, what would be the estimated causal effect of theminimum wage increase on labor supply? How confident can we be thatthis estimate is yielding a true causal effect? Should we beworried that this estimate is biased? Discuss.

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The estimated causal effect of the minimum wage increase on labor supply would be 17 ho... View the full answer