Use the data in MINWAGE.RAW for this exercise. In particular, use the employment and wage series for
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(ii) Add lags 1 through 12 of gmwage to the equation in part (i). Do you think it is necessary to include these lags to estimate the long-run effect of minimum wage growth on wage growth in sector 232? Explain.
(iii) Run the regression gemp232 on gmwage,gcpi. Does minimum wage growth appear to have a contemporaneous effect on gemp232?
(iv) Add lags 1 through 12 to the employment growth equation. Does growth in the minimum wage have a statistically significant effect on employment growth, either in the short run or long run? Explain.
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Introductory Econometrics A Modern Approach
ISBN: 978-0324660548
4th edition
Authors: Jeffrey M. Wooldridge
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