Running head: ASSIGNMENT #2 1

Assignment #2

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ASSIGNMENT #2 2

Question 1-3
1) The research question is tipped wage influences on earnings and employment in Full-

Service Restaurants (FSR). The tipped wage acquired by tipped workers also referred to

as the cash or subminimum wage has abundant state discrepancy that helps empirical

estimation. It is more common to find employment of tipped workers in the Full-service

Restaurants than in the Limited Service Restaurants sector. Therefore, a panel of data

from the quarterly census of Wages and Employment that permits separation of FSR from

LSR will be utilized.

2) The author utilized bivariate regression since it is a flexible method where independent

variables could be numeric or categorical, and also because interactions amongst the

variables might become combined; and further allows the researcher to include

polynomial terms. Therefore, the relationship between two variables would be different

for FSR and LSR sectors.

3) It was appropriate for the author to employ bivariate or correlation regression in the

research. We realize that controlling for the tipped wage causes the projected influence of

the minimum wage to fail in FSRs. From the regression analysis, approximations of

earnings effects of the minimum wage on tipped employees are positively biased when

fluctuations in the tipped wage policy are not taken into consideration.

Question 4-6

4) The author displayed the data by using a table to demonstrate tipped wage influences on

earnings and employment in FSR sector. The outcome from the table reported the

projected elasticity's of employment and earnings on the minimum and tipped wage. The

standard errors are provided in parenthesis.

ASSIGNMENT #2 3

5) The table shows us which variable affects the other. Moreover, the correlation between

the variables has uniformity. For instance, increasing the tipped wage considerably raises

the earnings of workers in FSRs. The assessments indicates that a 10 percent increment in

the tipped wage increases average earnings about 0.4 percent. Therefore, it was easy to

interpret the table.

6) The table was easy to interpret as bivariate or correlation regression allows the author to

collect more data, hence, making it easier for a person to comprehend the information

provided in the table. Additionally, the table acts as a source of information for new

researcher attempting to study the effects of tipped wages on earnings and employment in

FSR.
ASSIGNMENT #2 4

References

Allegretto, S., & Nadler, C. (2015). Tipped wage effects on earnings and employment in full

service restaurants. Industrial Relations: A Journal Of Economy & Society, 54(4), 622-

647. doi:10.1111/irel.12108