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Table Of Contents
Causal Inference with Bayesian Networks
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This chapter examines the famous Card and Krueger minimum wage study from 1994, which investigated the impact of a minimum wage increase on fast-food employment in New Jersey and Pennsylvania. Using surveys of fast-food outlets, the study contrasted employment in New Jersey, which raised its minimum wage, to neighboring Pennsylvania, where it remained unchanged. The main idea behind this causal analysis is to use the trend of the control group (those in Pennsylvania) as a counterfactual for the unobserved trend in the treatment group (those in New Jersey). The causal analysis employs linear regression and the Inverse Probability of Treatment Weighting (IPTW) to estimate the causal effect. All these methods are implemented in Python, and the causallib package will be used to estimate the causal effect.
In this chapter, we’re going to cover the following main topics: