Card and Krueger polled 410 fast-food joints and rewrote minimum wage lore

The orthodoxy was arithmetic: raise the minimum wage and employment must fall. But the evidence behind it came from comparing whatever jobs paid low wages across unrelated times and places — confounded by everything else that differs between them. In 1992, New Jersey handed economists an opening by raising its minimum from $4.25 to $5.05 an hour while neighboring Pennsylvania stood still.

David Card and Alan Krueger surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the rise. Fast food was the ideal laboratory: standardized jobs and chains straddling the border meant the two samples matched on nearly everything except the policy. Differencing the two states and the two dates cancelled the recession, the season and the region in one move.

The result defied the doctrine: employment at New Jersey's restaurants did not fall relative to Pennsylvania's. Their 1994 paper fought a decade of re-examinations and helped carry the 1996 federal minimum-wage increase; the approach itself — natural experiments read with the right econometrics, as Angrist and Imbens formalized — reorganized empirical economics and won the 2021 Nobel memorial prize, with the committee noting that raising the minimum wage does not necessarily reduce jobs.

Borrow a neighbor as the control group

The state border made the control group: one labor market split by a policy line is the closest thing economics has to a clinical trial.

Fast food was the right lab — standardized jobs, heavy minimum-wage exposure, and the same chains operating on both sides.

Before-and-after differencing cancelled every other shock of 1992 for both states alike.

The design turned a moral argument about wages into a measurable disagreement about data.

When you can't run an experiment, find the one reality already ran: a policy line drawn through a matched pair is a laboratory. The counterfactual is usually a neighbor.

The paper triggered years of published re-analysis and still stood as the reference case for natural-experiment reasoning; it fed into the 1996 federal minimum-wage increase. The broader natural-experiment program Card helped start — on immigration, education and labor — earned him half of the 2021 Nobel memorial prize, with Angrist and Imbens honored for its econometric foundations.