We Just Created More Than 1,000 Synthetic Controls To Study California's $20 Fast Food Minimum Wage

Abstract

Synthetic control methods hold the promise of identifying a credible counterfactual by closely reproducing pretreatment outcome paths. Their reliability, however, depends in part on how effectively they constrain researchers’ less-visible degrees of freedom. We explore these methods’ sensitivity by constructing 1440 plausibly defensible specifications to estimate the employment effect of California’s $20 fast-food minimum wage. While over 96 percent of the estimated employment effects are negative, the range is vast, illustrating that synthetic control methods are sensitive to specification choice. Estimates from simpler and far more transparent difference-in-differences methods lie near the centers of the comparable distributions of synthetic control estimates. The labor market effects of California's AB 1228 are also analyzed, with varied conclusions, in both the initial and revised version of NBER working paper 34033 and in working paper 35171 .