(i) Using the data in INJURY.RAW for Kentucky, the estimated equation when afchnge is dropped from (13.12) is

Is it surprising that the estimate on the interaction is fairly close to that in (13.12)? Explain.
(ii) When afchnge is included but highearn is dropped, the result is

Why is the coefficient on the interaction term now so much larger than in (13.12)? [In equation (13.10), what is the assumption being made about the treatment and control groups if (1 = 0?]

Transcribed Image Text:

logídurat) 1.129 253 highearn 198 afehnge highearm (0.022) 042) n 5,626, R 02 (.052) log(duran = 1.233-.100 afchnge + .447 afchnge-highearn (0.023) 040) n = 5.626, R2 = .016. .050)