Clarke and Primo Redux

This NYT opinion piece by Kevin Clarke and David Primo summarizes for a lay audience some of the important arguments in their book A Model Discipline. I’ve written here about their position before, so you’d imagine that there’s not much more to say about this. But something that they wrote did strike me as worthy of further reflection.

They write

the analysis of empirical data can be valuable even in the absence of a grand theoretical model. Did the welfare reform championed by Bill Clinton in the 1990s reduce poverty? Are teenage employees adversely affected by increases in the minimum wage? Do voter identification laws disproportionately reduce turnout among the poor and minorities? Answering such questions about the effects of public policies does not require sweeping theoretical claims, just careful attention to the data.

I see the authors’ point: we don’t need a Grand Unified Field Theory of Unemployment to try to ask if minimum wage laws affect teenage employment. But we cannot hope to develop any kind of credible answer to this question with a lot of theory. We can’t just “show the data” and let that be that, because our theories of both policymaking and labor markets tell us that it should be hard to figure out if minimum wage laws affect teenage employment. An economist will tell you that the effect of minimum wage laws on employment (or at least the size of the effect) depends on things like the wage elasticity of the demand for labor, the nature of the pool of potential employees, and so on. A political scientist will tell you that the very existence of the minimum wage law probably depends on something about voters’ expected beliefs about the future path of wage rates. All of this means that it’s hard to identify the precise kind of evidence that you’d need to have to know the effect of minimum wage laws on unemployment.

There’s a lot of theory there. Maybe it’s not “grand” theory, but it’s theory, and it’s vital for helping us to know what to look for in the data. So when Clarke and Primo write that “every theory must have its empirical support (and vice versa)” I’m willing to concede the first point, but not at all the second.