Business Major Studies Effects on Rise in Minimum Wage

Jaclyn LaLima, Verrazano Class of 2018, Completed Major in Business Economics and a Minor in Business Management

Hello Verrazanish and other readers! My name is Jaclyn LaLima and I am a fellow Verrazano student majoring in economics. I say that confidently now (four years later) but truthfully, I was just an undeclared major with a love for math and a strong dislike for essay writing. Therefore, it is not surprising that a math-y subject like economics would steal my heart. It is even less surprising that the required 12-page Verrazano capstone project would effortlessly become my worst college nightmare. 
I sat in my rudimentary economics classes wondering what topics I could possibly investigate for my future research project. The topic of Okun’s Law (the relationship between employment and output) was the first to catch my attention. One day, my professor had briefly mentioned how automation in the workplace could actually alter Okun’s Law—then carried on with our regularly scheduled programing of Introduction to Macroeconomics for it to never be mentioned again. Unfortunately, three professors told me that this research could not be administered because the effects of automation were still too new to estimate. Maybe that research is best left to the economics majors of the future. Shout out to those folks. 
After some brainstorming, I thought it might be even more interesting and relevant to study the effects of raising the minimum wage on employment. So, no, I did not get to study what I had originally hoped to in my sophomore year. But then again, who would have thought I would be studying economics in the first place? Not me.
The beginning stages of my research were quite enjoyable. I learned how to append datasets and merge new variables into the dataset using STATA. This is something that had not been taught in my econometrics class, as the datasets we analyzed were prepared by the professor beforehand. 
I felt a sense of high achievement meeting with my mentor every week because I was able to complete the tasks he gave me, and things were moving along nicely. That all changed when we ran our first linear regression. The regression showed that when the minimum wage increases, employment increased greatly—contrary to economic theory. My mentor and I ran so many different regressions and did so many tests to try and figure out why this was occurring. 
The answer was found while I was preparing for the literature review portion of my paper. Another researcher had mentioned that those studying wages and employment often use what is known as a “lead” in the minimum wage because new minimum wage laws are usually announced before they are implemented—causing firms to adjust their employment levels prior to the change actually taking place. This drastically changed the outcome and the approach of our research. 
We really struggled to get it right, but I learned a lot about data analysis and how to eliminate bias hands-on (also something not emphasized much in my econometrics class) in the process. Given more time, I would have liked to better my research by examining how the minimum wage effects low-wage versus higher-wage workers, their age, how many hours they worked, and so forth. I would have also liked to understand other biases present in my research and how to correct for them. I may just do this on my own time, as I have really found a love for data analysis and econometrics. It is certainly a topic not to be underestimated!