Practice Problems ch01

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York University *

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3210

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Economics

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Jan 9, 2024

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Chapter 1 Computer Exercises C1.1 Use the data in WAGE1.dta for this exercise. a. Find the average education level in the sample. What are the lowest and highest years of education? b. Find the average hourly wage in the sample. Does it seem high or low? c. The wage data are reported in 1976 dollars. Using the Internet, find the Consumer Price Index (CPI) for the years of 1976 and 2020. d. Use the CPI values from c) to find the average hourly wage in 2020 dollars. Now does the average hourly wage seem reasonable? e. How many women are in the sample? How many men? C1.2 Job training program. The data in JTRAIN2.dta come from a job training experiment conducted for low-income men during 1976-1977; see LaLonde (1986) a. Use the indicator variable train to determine the fraction of men receiving job training. b. The variable re78 is earnings from 1978, measured in thousands of 1982 dollars. Find the average of re78 for the sample of men receiving job training and the sample not receiving job training. Is the difference economically large? c. The variable unem78 is an indicator of whether a man is unemployed or not in 1978. What fraction of the men who received job training are unemployed? What about for men who did not receive job training? Comment on the difference. C1.3 Health data The data set is posted on the course website (Health_height_weight.csv). There are three variables and 16 observations in the data set, health (an index of individual health condition, the higher the index, the healthier the individual), weight and height . You will need the following command to load in the data insheet using C:\Econ3210\STATA_Commands_Output\ Health_height_weight.csv, clear a. Take correlation of all three variables. b. Draw scatterplot using health versus height and then using health versus weight.

Solutions Check the STATA commands.do file for all computer related exercises. Computer Exercises C1.1 a. The sample average of education is 12.56 years with the minimum to be 0 and the maximum to be 18. . summarize(educ), detail years of education ------------------------------------------------------------- Percentiles Smallest 1% 4 0 5% 8 0 10% 9 2 Obs 526 25% 12 3 Sum of wgt. 526 50% 12 Mean 12.56274 Largest Std. dev. 2.769022 75% 14 18 90% 16 18 Variance 7.667485 95% 17 18 Skewness -.6195741 99% 18 18 Kurtosis 4.884245 b. The sample average hourly wage is 5.90, seems to be rather low (quite below the current minimum wage in the US.). c. Historical US CPI: https://www.minneapolisfed.org/about-us/monetary-policy/inflation- calculator/consumer-price-index-1913- Based on this website, the CPI was 56.9 in 1976 and 258.8 in 2020. d. To convert 1976 dollar into 2020 dollar, we have: 258.8 5.9 26.84 56.9 ´ » Now it seems to be reasonable. e. There are 252 women and 274 men in the sample. C1.2 a. The fraction of men receiving training is 185 0.42 445 » . b. The average earnings for men receiving training is 6350 dollars and 4550 dollars for men not receiving training. The difference of 1800 dollars is very large economically, about 40% increase in earnings. c. Among men receiving training, the unemployment rate is about 45 0.24 185 » ;

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