One method to estimate the causal effect of education on income based on the Vietnam draft...

 

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One method to estimate the causal effect of education on income based on the Vietnam draft lottery. The table below shows the average education and annual salary of two groups of men: those born on September 7, 1950, and those born on September 8, 1950. Birth date: Lottery number: Average September 7, 1950 September 8, 307 1950 education, in in 1990 $42,000 $40,000 years 12.3 Average salary 11.8 a. Based on this methodology, what is an estimate of the rate of return to a year of education (in percent terms)? (1 point) b. What is the key assumption of this method? (HINT: how are men born on September 7 different from men born on September 8...and how are they the same)? (1 point) c. Describe one way in which this paper helps to estimate the value of schooling. Explain one limitation of this study in thinking about the average return to education. (1 point) One method to estimate the causal effect of education on income based on the Vietnam draft lottery. The table below shows the average education and annual salary of two groups of men: those born on September 7, 1950, and those born on September 8, 1950. Birth date: Lottery number: Average September 7, 1950 September 8, 307 1950 education, in in 1990 $42,000 $40,000 years 12.3 Average salary 11.8 a. Based on this methodology, what is an estimate of the rate of return to a year of education (in percent terms)? (1 point) b. What is the key assumption of this method? (HINT: how are men born on September 7 different from men born on September 8...and how are they the same)? (1 point) c. Describe one way in which this paper helps to estimate the value of schooling. Explain one limitation of this study in thinking about the average return to education. (1 point)

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a To estimate the rate of return to a year of education using the given methodology we can compare t... View the full answer