New Jersey raises its minimum wage while neighboring Pennsylvania does not.Economists compared the labor market in both states to draw conclusions about the effect of a minimum wage on employment and wages.This is an example of:

Question

Quizplus · Accepted Answer

A natural experiment is a situation in which a researcher observes the effects of a change in a variable without being able to control the change. In this case, the economists compared the labor market in New Jersey, which raised its minimum wage, to the labor market in Pennsylvania, which did not. This allowed them to observe the effects of the minimum wage increase without having to control for other factors that could have affected the labor market.

New Jersey Raises Its Minimum Wage While Neighboring Pennsylvania Does