Econ 321 Problem Set 1

# Econ 321 Problem Set 1 - e 7 a z i f PI(BÂ vsenior ar...

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Unformatted text preview: e. 7 - a z i f. PI(BÂ§ vsenior ar freshman smoker) too + 1 + m 100 Pr(Bs :ďŹâeshmanornonsmokcr) : Tââ + " + â' + vâvâov + Iv : W : W n s 4. Wooldridge Problem 1.2, 3. Here is one way to pose the question: If two ďŹrms, say A and B, are identical in all respect except that ďŹrm A supplies job training one hour per worker more than ďŹrm B, by how much would ďŹrm Aâs output differ from ďŹrm Bâsâ.7 Another way to think ofit would be to consider two workers A and B who are identical except that A receives more training than B, What is the difference in productivity between the two workers? Firms are likely to choose job training depending on the characteristics of workers. Some observed characteristics are years of schooling, years in the workforce, and experience in a particular job. There may be a number of different ways such characteristics affect the decision to train. For example, consider years of schooling . It may be that the ďŹrm trains those with more education less, as school may have provided the workers with a good deal of the training. 0n the other hand, the ďŹrm may expect to keep workers with more education for a longer time, thus providing them with more ďŹrm-speciďŹc training an investment. Firms might even discriminate based on age, gender, or race. Perhaps ďŹrms choose to offer training to more or less able workers, where "ability" might be difďŹcult to quantify but where a manager has some idea about the relative abilities of different employees. Moreover, different kinds of workers might be attracted to firms that offer more job training on average, and this might not be evident to employers. The amount and quality of capital and technology available to workers would also affect output. So, two ďŹrms with exactly the same kinds of employees would generally have different outputs if they use different amounts of capital or technology. The quality of managers would also have an effect, as would the quality of all other workers the employe< may have to work with to generate output. No, unless the amount of training is randomly assigned. The many factors listed in (b) and (c) can contribute to ďŹnding a positive correlation between output and training even if job training does not improve worker productivity. In other words, we cannot ascribe the causal chain. 5. Wooldridge Problem C1.2 a. b. There are 1,388 observations in the sample. The variable smoking shows that 212 women have cigr > 01 The average of mg: is about 2.09, but this includes the 1,176 women who did not smoke. Reporting just the average masks the fact that almost 85 percent of the women did not smoke. It makes more sense to say that the "typical" woman does not smoke during pregnancy; indeed, the median number of cigarettes smoked is zero, The average of age over the women with cigs > 0 is about 13.7. Of course this is much higher than the average over the entire sample because we are excluding 1,176 zeros. The average of fatheduc is about 13.2, There are 196 observations (N*) with a missing value for fatheduc, and those ovservations are necessarily excluded in computing the average. The average and standard deviation of famine are about 29.027 and 18.739, respectively, but famine is measured in thousands of dollars. So, in dollars, the average and standard deviation are \$29,027 and \$18,739, Minilab Session: (a) *create a new column âsmokingâ in c15. âsmokingâ:1 if âcigsâ(e10)>0, and 0 otherwise. *âpacksâ(el3) can be used instead of âcigsâ(c10)i ...
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