Hi,
I am running a regression where I want to check for strategic minimum wage setting procedures. I want to check the influence of the wage of neighbouring states(A) on the wage of state B. There are several endogeneity problems however, including OVB. I use a spatial weight to calculate the average of the neighbours wage. It could be that the wage in state B does not only depend on the (weighted) wage of the neighbouring states but also on transportation possibilities between states for example. I have been working on overcoming this issue, but I am a bit stuck. I am including several control variables for state B such as demographics and income.
Does anyone have an idea? Thank you
I am running a regression where I want to check for strategic minimum wage setting procedures. I want to check the influence of the wage of neighbouring states(A) on the wage of state B. There are several endogeneity problems however, including OVB. I use a spatial weight to calculate the average of the neighbours wage. It could be that the wage in state B does not only depend on the (weighted) wage of the neighbouring states but also on transportation possibilities between states for example. I have been working on overcoming this issue, but I am a bit stuck. I am including several control variables for state B such as demographics and income.
Does anyone have an idea? Thank you
