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Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania
Question

What is the parallel-trends assumption doing here, exactly?

WEweizh· 4 days ago

DiD identifies the effect by assuming NJ and PA fast-food employment would have moved in parallel absent the policy. How do the authors make that credible, and what would convince you it's violated? Pre-trend comparison feels necessary but the panel here is short.

Economics

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Accepted answer

TBtbecker4 days ago

Short panels are the weak point — you can't see many pre-period trends. Geographic proximity (same labor market) is the main argument for comparability. Ideally you'd show several pre-policy periods moving together; with two waves you're partly trusting the design.