Econ142_spring2008_problemset_3

Econ142_spring2008_problemset_3 - University of California,...

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University of California, Berkeley Prof. Andrea Weber Department of Economics Spring 2008 Applied Exercise #3 – Due Thursday 03/20/08 – This exercise examines the return to education on wages in an instrumental variables framework, using college proximity as an instrument for education. It will be helpful to read the paper by David Card (1995) in the reader as you do this problem set. Feel free to work in groups. Each student must hand in their own solution to the problem set using own words to explain and interpret the results. Data: The data are drawn from the NLS Young Men Cohort. We have a sample of 14-24 year old men for whom the data contains information about family background, living arrangements, and region of residence in 1966. A follow up survey in 1976 provides information on educational attainment and earnings for the same individuals (for details see Card 1995). Access the data on bspace site for Econ C142: problem set 3/ nls.dta (STATA 9 format). The observational unit of the data is the individual. The data set has 3010 observations. The key variables for this exercise are: lwage76 – natural log of hourly wage in 1976 age76 – age of the person in 1976 black – indicator variable equal to 1 if the person is black, zero otherwise ed76 – the individual’s completed years of schooling in 1976 daded – father’s completed years of schooling; set equal to sample mean if missing nodaded – father’s education imputed momed – mother’s completed years of schooling; set equal to sample mean if missing nomomed – mother’s education imputed famed – father and mother educational class 1-9
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This note was uploaded on 04/02/2008 for the course ECON 142 taught by Professor Weber during the Spring '08 term at University of California, Berkeley.

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Econ142_spring2008_problemset_3 - University of California,...

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