Problem 1 An investigation on the determinants of educational attainment We are interested in estimating the...
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Problem 1 An investigation on the determinants of educational attainment We are interested in estimating the effect of parental education on children's on educational attainment in New York City. To do so, we estimate the following simple model CeBo + B₁ Pe, +4₂ (1) where Ce, corresponds to the educational attainment of individual i, where i has between 40 and 50 years old, Pe, is the educational attainment of the parents of individual. 1. Describe the possible reasons for Pe, to be correlated with u 2. Explain why Pe, is likely related to the parental household income. Does this means that parental income is a good instrument for parental educational attainment? Why or why not? 3. Suppose that, about 50 years ago, the Education Department of the City randomly selected member of the parents generation to participate in an incentive program dedicated to increase their educational attainment. Explain how could you use this information to estimate the causal effect of parental education on the current generations education. Provide a formal argument in your answer. Problem 2 Consider the following model and answer the questions. where 21 CZ 91, +61, +91921 +2₂ 92,4 = ₁Z₁ + 0₂ (3) 1. Describe, in detail, how would you estimate a, through 2SLS. Be as thorough as possible and describe the role played by each variable. 1 Problem 3 Analyze each type of scenario and determine whether a Difference in Differences or a Regres- sion Discontinuity Design is the proper approach to identify the causal effect of the variable of interest. Provide a reasoning for your choice and explain if you would need to include several control variables (and specify which ones) in your regression analysis. 1. You are interested in analyzing the effects of a minimum wage increase in the share of the population living below the poverty line. Your data set consists on the working population with an income below the poverty line in two contiguous states, where, until now, poverty has followed a very similar dynamic. Moreover, both states have relatively the same policies, except from the fact that one of them decided to increase the minimum wage last year. 2. You are interested on the effect of a scholarship on the school performance of students. The scholarship has a GPA criteria, where students with a GPA of 3.51 or above are eligible for the scholarship while students with a GPA below that cut-off, are not. The principal of the school has given you access to information on the socioeconomic status of the students families. 3. You are interested in analyzing the effects of colonial rule over the present economic activity of two different countries: Anglopholand and Francopholand. Both countries are contiguous to each other. and until the middle of the XXth Century, Anglopholand was a British colony and Francopholand was a French colony. Both countries gained their independence around the same time and have relatively the same natural resources. They are separated by a series of mountains named "Mount Doom". You have information on the light consumption of both countries, specifically, luminescence maps that reflect the activity of each region of both countries. Consider this a proxy of present economic activity. The main difference on the colonial rule was the type of law system each country adopted. In Anglopholand the Common Law system has survived, while in Francopholand the Napoleonic Code type of law system remains in place. There are communities located right at the edges of the mountain chain at both sides of the border. 4. You are interested in analyzing the effects of the introduction of a new bank regulation on banking activity. The new bank regulation was enacted at the county level, and it consists on requiring financial institutions to provide their customers with an insurance in case the bank goes bankrupt. You have information on the county that introduced the new regulation and all contiguous counties. There are urban settlements at the border between each county and for the last few years all of them have followed the same trend in terms of their economic performance, including the banking sector. Problem 4 To answer these questions, use the information presented in the following paragraphs and the tables. Consider that all the questions are related between themselves, unless it is specified they are not. 2 You are designated as the Chief Economist of the Educational Board of Stagnalaska, a small country. The country has a free public college system. The way students are sorted into the different colleges of the system is through a two-way matching process. Students lists 20 options, from their most preferred to their least preferred college. Have in mind that each college is specialized in certain degrees, so getting assigned to an specific college actually implies being assigned to an specific degree. At a second stage, high school students take an standardized test, and the score of said test is used to assign the students to the colleges. The way they are assigned is by picking the highest score that applied to an specific college, and then go downwards on the scores until all the available spaces are full. After all the places are filled or there are no more students who requested a college with empty spaces as their first option, students who could not get into their first option are assigned into their second option, and so on. In the following table the different cutoff scores (the minimum score to get assigned into a college) are listed, alongside the number of students who listed that college as the first option, and those who listed it as the second option. Furthermore, it lists the maximum score of those who listed the college as second option. College Arkham Citadel Bespin Coruscant Tatooine. Gotham Minimum score of first choice students 116 117 118 115 116 119 First choice Maximum score of students second option students 115 115 2,000 2,500 3,000 4.000 3.000 200 116 114 115. 117 Number of second option students 1,000 500 600 700 800 100 There is also an scholarship program for individuals who had the highest scores in the exam. However, there are not enough resources to give an scholarship for everyone. So the government randomizes the schol- arship assignment among the students who got a score above 117 out of 120 points. The government wants you to analyze the following: the effect on your first after college employment wage of being assigned to your preferred college versus being assigned to your second option. The government also wants you to analyze the effect of the scholarship program on the same outcome variable. 1. Describe, in detail, how would you carry out the task that has been assigned to you. Problem 1 An investigation on the determinants of educational attainment We are interested in estimating the effect of parental education on children's on educational attainment in New York City. To do so, we estimate the following simple model CeBo + B₁ Pe, +4₂ (1) where Ce, corresponds to the educational attainment of individual i, where i has between 40 and 50 years old, Pe, is the educational attainment of the parents of individual. 1. Describe the possible reasons for Pe, to be correlated with u 2. Explain why Pe, is likely related to the parental household income. Does this means that parental income is a good instrument for parental educational attainment? Why or why not? 3. Suppose that, about 50 years ago, the Education Department of the City randomly selected member of the parents generation to participate in an incentive program dedicated to increase their educational attainment. Explain how could you use this information to estimate the causal effect of parental education on the current generations education. Provide a formal argument in your answer. Problem 2 Consider the following model and answer the questions. where 21 CZ 91, +61, +91921 +2₂ 92,4 = ₁Z₁ + 0₂ (3) 1. Describe, in detail, how would you estimate a, through 2SLS. Be as thorough as possible and describe the role played by each variable. 1 Problem 3 Analyze each type of scenario and determine whether a Difference in Differences or a Regres- sion Discontinuity Design is the proper approach to identify the causal effect of the variable of interest. Provide a reasoning for your choice and explain if you would need to include several control variables (and specify which ones) in your regression analysis. 1. You are interested in analyzing the effects of a minimum wage increase in the share of the population living below the poverty line. Your data set consists on the working population with an income below the poverty line in two contiguous states, where, until now, poverty has followed a very similar dynamic. Moreover, both states have relatively the same policies, except from the fact that one of them decided to increase the minimum wage last year. 2. You are interested on the effect of a scholarship on the school performance of students. The scholarship has a GPA criteria, where students with a GPA of 3.51 or above are eligible for the scholarship while students with a GPA below that cut-off, are not. The principal of the school has given you access to information on the socioeconomic status of the students families. 3. You are interested in analyzing the effects of colonial rule over the present economic activity of two different countries: Anglopholand and Francopholand. Both countries are contiguous to each other. and until the middle of the XXth Century, Anglopholand was a British colony and Francopholand was a French colony. Both countries gained their independence around the same time and have relatively the same natural resources. They are separated by a series of mountains named "Mount Doom". You have information on the light consumption of both countries, specifically, luminescence maps that reflect the activity of each region of both countries. Consider this a proxy of present economic activity. The main difference on the colonial rule was the type of law system each country adopted. In Anglopholand the Common Law system has survived, while in Francopholand the Napoleonic Code type of law system remains in place. There are communities located right at the edges of the mountain chain at both sides of the border. 4. You are interested in analyzing the effects of the introduction of a new bank regulation on banking activity. The new bank regulation was enacted at the county level, and it consists on requiring financial institutions to provide their customers with an insurance in case the bank goes bankrupt. You have information on the county that introduced the new regulation and all contiguous counties. There are urban settlements at the border between each county and for the last few years all of them have followed the same trend in terms of their economic performance, including the banking sector. Problem 4 To answer these questions, use the information presented in the following paragraphs and the tables. Consider that all the questions are related between themselves, unless it is specified they are not. 2 You are designated as the Chief Economist of the Educational Board of Stagnalaska, a small country. The country has a free public college system. The way students are sorted into the different colleges of the system is through a two-way matching process. Students lists 20 options, from their most preferred to their least preferred college. Have in mind that each college is specialized in certain degrees, so getting assigned to an specific college actually implies being assigned to an specific degree. At a second stage, high school students take an standardized test, and the score of said test is used to assign the students to the colleges. The way they are assigned is by picking the highest score that applied to an specific college, and then go downwards on the scores until all the available spaces are full. After all the places are filled or there are no more students who requested a college with empty spaces as their first option, students who could not get into their first option are assigned into their second option, and so on. In the following table the different cutoff scores (the minimum score to get assigned into a college) are listed, alongside the number of students who listed that college as the first option, and those who listed it as the second option. Furthermore, it lists the maximum score of those who listed the college as second option. College Arkham Citadel Bespin Coruscant Tatooine. Gotham Minimum score of first choice students 116 117 118 115 116 119 First choice Maximum score of students second option students 115 115 2,000 2,500 3,000 4.000 3.000 200 116 114 115. 117 Number of second option students 1,000 500 600 700 800 100 There is also an scholarship program for individuals who had the highest scores in the exam. However, there are not enough resources to give an scholarship for everyone. So the government randomizes the schol- arship assignment among the students who got a score above 117 out of 120 points. The government wants you to analyze the following: the effect on your first after college employment wage of being assigned to your preferred college versus being assigned to your second option. The government also wants you to analyze the effect of the scholarship program on the same outcome variable. 1. Describe, in detail, how would you carry out the task that has been assigned to you.
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Related Book For
Elementary Statistics
ISBN: 978-0538733502
11th edition
Authors: Robert R. Johnson, Patricia J. Kuby
Posted Date:
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