Economics of Education


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Economics of Education 2 answers below » please answer all questions thanks Document Preview: 1 ECN 423: Economics of Education Problem Set 1 Due: September 4, 2014 Please note the class number, the problem set number, and your full name on your answers. Please turn in your answers at the beginning of class on the due date. 1. Suppose we have a data set covering 70 countries that includes data from 1980 and 1990 on gross domestic product (GDP) per capita and average years of education of the population. We estimate the View complete question » please answer all questions thanks Document Preview: 1 ECN 423: Economics of Education Problem Set 1 Due: September 4, 2014 Please note the class number, the problem set number, and your full name on your answers. Please turn in your answers at the beginning of class on the due date. 1. Suppose we have a data set covering 70 countries that includes data from 1980 and 1990 on gross domestic product (GDP) per capita and average years of education of the population. We estimate the following regression: 9080iiiysaße?=++ Where 90iy? is the percent change in GDP per capita from 1980 to 1990 and 80is is the average years of education in each country in 1980. a) What is the interpretation of ß ? Be as precise as you can. b) Describe three reasons whyß might be positive. c) Choose two reasons from part (b) and describe how you might distinguish between these two explanations, including what additional data you would need. 2. The United States is closer to the technology frontier than Mexico. However, many low-skill workers migrate from Mexico to the United States each year. Is this pattern of migration consistent with the theories laid out in Aghion et al (2005)? Why or why not? 3. In his 1977 paper “Estimating the Returns to Schooling” (Econometrica vol. 45 no. 1), Zvi Griliches estimates the following regression using data on the earnings of young men in 1969: ln,itititwsaße=++ where lnitw is log hourly wages andits is years of schooling. His results are reported in the table below, with standard errors in parentheses.(1) Years of schooling 0.065 (0.005) R-squared 0.309 a) What does ite represent in this estimation equation? b) Is the estimated effect of years of schooling on log hourly wages statistically significant? (Show the calculation necessary to answer this question.) c) James has 14 years of education and Martin has 12 years of education. What is the predicted difference between James’s and Martin’s log hourly wage?
2 4. Lucy is planning her investments in on-the-job training over her lifetime. What happens to her… Attachments: ECN-423-2014-….pdf View less » Sep 03 2014 09:07 AM

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