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What can be said about the 1994 Card-Krueger study of the minimum wage rate in New Jersey and Pennsylvania and of the Richardson-Troost study of the bank survival rates in Mississippi during the Great Depression?

O The Richardson-Troost study is an example of a natural experiment, but the Card-Krueger study is not.


O Both cases present examples of a natural experiment.


O The Card-Krueger study is an example of a natural experiment, but the Richardson-Troost study is not.


O Neither of the studies is an example of a natural experiment.

1 Answer

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Final answer:

Both the Card-Krueger and Richardson-Troost studies are examples of natural experiments, exploring the effects of policy and economic changes on employment and bank survival rates without researcher intervention.

Step-by-step explanation:

Both the 1994 Card-Krueger study of the minimum wage rate in New Jersey and Pennsylvania and the Richardson-Troost study of the bank survival rates in Mississippi during the Great Depression present examples of a natural experiment. A natural experiment occurs when a significant policy or event impacts the subjects under study, resembling an experimental manipulation but naturally occurring, not controlled by the researchers.

The Card-Krueger study took advantage of a natural experiment setting due to New Jersey's increase in the minimum wage while Pennsylvania's remained the same, providing an opportunity to observe the impacts on employment in the fast-food industry across the two neighboring states. Similarly, the Richardson-Troost study leveraged a natural occurrence, the Great Depression, to examine the bank survival rates, analyzing the real-world impact of economic downturn on financial institutions without the researcher's manipulation.

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