Some (Maybe) Unpleasant Arithmetic in Minimum Wage Evaluations: The Role of Power, Significance and Sample Size

Arbeitspapier

In this paper, we discuss the importance of sample size in the evaluation of minimum wage effects. We first show which sample sizes are necessary to make reliable statements about the effects of minimum wages on binary outcomes, and second how to determine these sample sizes. This is particularly important when interpreting statistically insignificant effects, which could be due to (i) the absence of a true effect or (ii) lack of statistical power, which makes it impossible to detect an effect even though it exists. We illustrate this for the analysis of labour market transitions using two data sets which are particularly important in the minimum wage research for Germany, the Integrated Labour Market Biographies (IEB) and the Socio-Economic Panel (SOEP).

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 11867

Classification and Topics

• Classification: Wirtschaft ; Hypothesis Testing: General ; Data Collection and Data Estimation Methodology; Computer Programs: General ; Wages, Compensation, and Labor Costs: Public Policy
• Subject: power calculation ; sample size ; significance testing ; evaluation ; minimum wage

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bachmann, Ronald ; Felder, Rahel ; Schaffner, Sandra ; Tamm, Marcus
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/185327
• Last update: 10.03.2025, 11:42 AM CET