ECON 1150 Problem Set 2 Solutions

# ECON 1150 Problem Set 2 Solutions - ECON 1150 Fall 2010...

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1 ECON 1150 Fall 2010 Problem Set 2: Due 09/29/10 Please be sure that the pages are stapled together in the correct order. Please write neatly. Parts within each question receive equal weight. 1. Suppose you are interested in estimating the effect of hours spent in a job-training program ( hours ) on subsequent hourly wage ( wage ). For concreteness, take the population to be all manufacturing workers in the state of Michigan. (i) If you were given a budget to run a controlled experiment, how would you structure the job training program in order to uncover the causal effect of job training on hourly wage? To uncover the causal effect of job training on hourly wage, one should be interested in keeping all factors other than training hours as identical across the participants of the study as possible. Keeping these other factors constant, a researcher randomly assigns number of training hours to each of the manufacturing workers from the randomly chosen sample. Resulting hourly wage is recorded, and the following econometric model is analyzed: . (ii) Suppose that the job training program is entirely voluntary, so that each worker chooses how much training he or she receives. Write the population model as , where E( u ) = 0. List at least two factors contained in

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## This note was uploaded on 02/20/2011 for the course ECON 1150 taught by Professor Staff during the Fall '08 term at Pittsburgh.

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ECON 1150 Problem Set 2 Solutions - ECON 1150 Fall 2010...

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