Here is a quote from today’s Journal’s opinion piece on minimum wage increase:
Study after study reveals that there are long-term career benefits to working as a teenager and that these benefits go well beyond the pay that these youths receive. A study by researchers at Stanford found that those who do not work as teenagers have lower long-term wages and employability even after 10 years.
What the study found is a correlation, but WSJ uses it to imply causation – not working as a teenager leads to getting lower long-term wages and employability. But isn’t is it possible that there is an underlying cause for both these observed characteristics (omitted variable bias)? Is it possible that the same reason that led to unemployment as a teenager is driving low-wages and employability in later years?
On the other hand, for those with high wages and employability is working as a teenager just one tool? Would they have used any other means equally effectively to achieve what they want?
Correlation does not imply causation. The Stanford study was an observation, not a controlled experiment where they randomly selected teenagers, assigned them randomly to working and non-working groups and then years later look at their earning potential.