Problem 7 - Using differences in differences to estimate the impact of school construction In this problem we will interpret the main result in the paper by Esther Duflo, "Schooling and labor market consequences of school construction in Indonesia" posted in the folder for this problem set. The paper investigates the effect of a school construction program on wages in Indonesia. To estimate the effect of more schools on wages the paper exploits variation in exposure to the program: "the exposure of an individual to the program was determined both by the number of schools built in his region of birth and by his age when the program was launched" (Duflo, 2001). The following information is from table 3 of the paper: Mean of log wages, persons aged 12 to 17 years old in 1974, in low-construction areas: 7.02 Mean of log wages, persons aged 12 to 17 years old in 1974, in high-construction areas: 6.87 Mean of log wages, persons aged 2 to 6 years old in 1974, in low-construction areas: 6.73 Mean of log wages, persons aged 2 to 6 years old in 1974, in high-construction areas: 6.61 The paper uses a differences in differences strategy. Using the information above: a) Indicate what is the treatment, the treatment group, and the control group b) Draw the difference in differences table. c) Interpret the effect of the school construction program on wages Problem 7 - Using differences in differences to estimate the impact of school construction In this problem we will interpret the main result in the paper by Esther Duflo, "Schooling and labor market consequences of school construction in Indonesia" posted in the folder for this problem set. The paper investigates the effect of a school construction program on wages in Indonesia. To estimate the effect of more schools on wages the paper exploits variation in exposure to the program: "the exposure of an individual to the program was determined both by the number of schools built in his region of birth and by his age when the program was launched" (Duflo, 2001). The following information is from table 3 of the paper: Mean of log wages, persons aged 12 to 17 years old in 1974, in low-construction areas: 7.02 Mean of log wages, persons aged 12 to 17 years old in 1974, in high-construction areas: 6.87 Mean of log wages, persons aged 2 to 6 years old in 1974, in low-construction areas: 6.73 Mean of log wages, persons aged 2 to 6 years old in 1974, in high-construction areas: 6.61 The paper uses a differences in differences strategy. Using the information above: a) Indicate what is the treatment, the treatment group, and the control group b) Draw the difference in differences table. c) Interpret the effect of the school construction program on wages