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Regression Discontinuity Method - Card and Krueger Study - Statistics Assignment Help
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Task 2:
“job training.dta” contains the treated and control units from the male workers. Treated units are males having followed a job training program in 1976-1977.
a) Using 1978 observations, regress Ln(Income) on Treatment indicator controlling for individual characteristics. Assuming that the treatment assignment was not random but resulted from targeting workers with long unemployment histories, could you assign to the program effect the resulting income gap between earnings of treatment and control groups? Interpret the coefficient corresponding to the T variable.
b) Use difference-in-difference estimator to study the impact of the job training on the income of workers controlling for their individual characteristics. What is the effect of the program?
c) Explain what are assumptions underlying the DD estimation.
d) Explain why b) estimator is superior to the a) estimator.
e) What is the data structure (cross-sections / panel / time series)? What is a drawback of the data given their structure?
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Assignment Task: Task 1: Card and Krueger (1994) used the following natural experiment to study the elasticity of the demand for low-skilled workers with respect to the minimum wage: In 1992, the minimum wage in New Jersey rose from 4.25$ to 5.05$ per hour, but the minimum wage in neighboring Pennsylvania stayed constant. Card and Krueger collected data on employment at fast-food restaurants before and after the wage increase in the two states. They considered New Jersey workers as the treatment group and Pennsylvania workers as control group. They estimated then the following difference –in –difference (DD) model:
Task 2:
“job training.dta” contains the treated and control units from the male workers. Treated units are males having followed a job training program in 1976-1977.
a) Using 1978 observations, regress Ln(Income) on Treatment indicator controlling for individual characteristics. Assuming that the treatment assignment was not random but resulted from targeting workers with long unemployment histories, could you assign to the program effect the resulting income gap between earnings of treatment and control groups? Interpret the coefficient corresponding to the T variable.
b) Use difference-in-difference estimator to study the impact of the job training on the income of workers controlling for their individual characteristics. What is the effect of the program?
c) Explain what are assumptions underlying the DD estimation.
d) Explain why b) estimator is superior to the a) estimator.
e) What is the data structure (cross-sections / panel / time series)? What is a drawback of the data given their structure?
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