ProblemSet4 - ECON 3200 Introduction to Econometrics...

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ECON 3200 Introduction to Econometrics Problem set 4 (due date: March 24, 2009) Problem 1 (Wooldridge 7.6) To test the e/ectiveness of a job training pro- gramme on the subsequent wages of workers, we specify the model log ( wage ) = & 0 + 1 train + 2 educ + 2 exper + u; where train is a binary variable equal to unity if a worker participated in the programme. Think of the error term u as containing unobserved worker ability. If less able workers have a greater chance of being selected for the programme, and you use an OLS analysis, what can you say about the likely bias in the OLS estiamtor of 1 ? [ Hint : Refer back to Chapter 3.] Problem 2. (Wooldridge 7.10) For a child living in a particular school district, let voucher i be a dummy variable equal to one if a child is selected to par- ticipate in a school voucher programme, and let score i score on a subsequent standardized exam. Suppose that the participation variable, voucher i is completely randomized in the sense that it is inde-
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This note was uploaded on 10/03/2009 for the course ECON 3200 taught by Professor Neilsen during the Spring '08 term at Cornell University (Engineering School).

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ProblemSet4 - ECON 3200 Introduction to Econometrics...

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