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4. One method to estimate the causal effect of education on income based on the Vietnam draft lottery. The table below shows the average education and annual salary of two groups of men: those born on September 7, 1950, and those born on September 8, 1950. Average salary in 1990 Birth date: Lottery number: Average education, in years 12.3 September 7, 1950 1 $42,000 September 8, 1950 307 11.8 $40,000 a. Based on this methodology, what is an estimate of the rate of return to a year of education (in percent terms)? b. What is the key assumption of this method? (HINT: how are men born on September 7 different from men born on September 8...and how are they the same)? c. Describe one way in which this paper helps to estimate the value of schooling. Explain one limitation of this study in thinking about the average return to education.

4. One method to estimate the causal effect of education on income based on the Vietnam draft lottery. The table below shows the average education and annual salary of two groups of men: those born on September 7, 1950, and those born on September 8, 1950. Average salary in 1990 Birth date: Lottery number: Average education, in years 12.3 September 7, 1950 1 $42,000 September 8, 1950 307 11.8 $40,000 a. Based on this methodology, what is an estimate of the rate of return to a year of education (in percent terms)? b. What is the key assumption of this method? (HINT: how are men born on September 7 different from men born on September 8...and how are they the same)? c. Describe one way in which this paper helps to estimate the value of schooling. Explain one limitation of this study in thinking about the average return to education.

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
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4. One method to estimate the causal effect of education on income based on the Vietnam draft lottery. The table below shows the average education and annual salary of two groups of men: those born on September 7, 1950, and those born on September 8, 1950. Average salary in 1990 Birth date: Lottery number: Average education, in years 12.3 September 7, 1950 1 $42,000 September 8, 1950 307 11.8 $40,000 a. Based on this methodology, what is an estimate of the rate of return to a year of education (in percent terms)? b. What is the key assumption of this method? (HINT: how are men born on September 7 different from men born on September 8...and how are they the same)? c. Describe one way in which this paper helps to estimate the value of schooling. Explain one limitation of this study in thinking about the average return to education.
Transcribed Image Text:4. One method to estimate the causal effect of education on income based on the Vietnam draft lottery. The table below shows the average education and annual salary of two groups of men: those born on September 7, 1950, and those born on September 8, 1950. Average salary in 1990 Birth date: Lottery number: Average education, in years 12.3 September 7, 1950 1 $42,000 September 8, 1950 307 11.8 $40,000 a. Based on this methodology, what is an estimate of the rate of return to a year of education (in percent terms)? b. What is the key assumption of this method? (HINT: how are men born on September 7 different from men born on September 8...and how are they the same)? c. Describe one way in which this paper helps to estimate the value of schooling. Explain one limitation of this study in thinking about the average return to education.
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