ECO4186 Applied Econometrics Assignment Problem

Assignment Help Econometrics

Reference no: EM132382887

ECO4186 Applied Econometrics Assignment - Department Of Economics, University of Ottawa, Canada

1. Create a dataset

Go to National Center for Education Statistics (NCES) website.
Select "Public data"
Select "NELS (National Education Longitudinal Study of 1988) 1988-00"
Select and download the codebook
Use the dta file "NELS_88_dta" available on Brightspace.

2. Clean data and create variables

Create following variables

racial/ethnic background
single parent household dummy
urban area dummy
mother is employed (or unemployed) dummy
father is employed (or unemployed) dummy
parental education
family income
school test score
school problems
smoking behavior
being held back in school
dropout from high school
received GED

Careful to properly.

3. Basic OLS

Read the paper "The schooling costs of teenage out-of-wedlock childbearing: Analysis with a within-school propensity-score-matching estimator" by David Levine and Gary Painter, The Review of Economics and Statistics, Nov 2003, 85 (4): 884-900

Create a descriptive table (similar to Table 1 in the Levine and Painter (2003) paper) with the variables you created. Do not worry if the number of observations and values are different.

Perform a regression to show the average treatment effect of teenage out-of-wedlock childbearing on schooling (dropping out of high school or receiving a GED). Explain your results. Discuss whether your result represent a causal effect.

4. Matching

(a) Show balancing on the variables you cleaned/created for the full sample.

(b) Perform a propensity score matching

Choose the variables you will match on. Explain your selection of variables.
Create propensity score.
Show balance with a graph.
Show balance with a table (mean, differences in means for the treated and control, t-statistics).
Discuss the balance.

(d) Discuss your results and compare them to the OLS.

5. Instrumental Variable

(a) Read Card (1995) (available on Brightspace)

(b) Use "CARD.dta" (download it from Brightspace)

(c) Estimate a log wage equation by OLS with educ, exper, exper2, black, south, smsa, reg661 through reg668, and smsa66 as explanatory variables. Discuss your results and compare them with Table 2, Column (2) in Card (1995).

(d) Estimate a reduced form equation for educ containing all explanatory variables from part a and the dummy variable nearc4. Do educ and nearc4 have a practically and statistically significant partial correlation? [See also Table 3, Column (1) in Card (1995).]

(e) Estimate the log wage equation by IV, using nearc4 as an instrument for educ. Compare the 95 percent confidence interval for the return to education with that obtained from part a. [See also Table 3, Column (6) in Card (1995).]

(f) Now use nearc2 along with nearc4 as instruments for educ. First estimate the reduced form for educ, and comment on whether nearc2 or nearc4 is more strongly related to educ. How do the 2SLS estimates compare with the earlier estimates?

(g) For a subset of the men in the sample, IQ score is available. Regress iq on nearc4. Is IQ score uncorrelated with nearc4?

(h) Now regress IQ on nearc4 along with smsa66, reg661, reg662, and reg669. Are IQ and nearc4 partially correlated? What do you conclude about the importance of controlling for the 1966 location and regional dummies in the log wage equation when using nearc4 as an IV for educ?

NOTE: You should hand in (1) your code, (2) logfile and (3) a word/PDF document with your figures, tables and interpretations of the results. Save these documents as surname code, surname log and surname results, respectively. Upload these documents on brightspace.

Attachment:- Applied Econometrics Assignment Files.rar

Reference no: EM132382887

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