Consider the following wages of workers, some in a job training program some not
ID: 1224796 • Letter: C
Question
Consider the following wages of workers, some in a job training program some not in the program. If there was no randomization could we say anything about the effect of the job training program? Why or why not? Now suppose that the workers were assigned to be receive job training at random. What is the treatment and control group. Still assuming random assignment, what is the average treatment effect (ATE). Suppose we are trying to evaluate the effect of a minimum wage increase in the state Econoland, using the state of Mathematica as a control. If unemployment in the year before the increase was 6.2% in Econoland and 5.8% in Mathematica. And in the year after the unemployment rate was 5% in Econoland and 4.2% in Mathematica. What is the difference-in-difference estimate of the effect of the minimum wage?Explanation / Answer
i) It there waas no randomization then there might be many biases (may be not consiously) which may come in play for eg. the researcher may have a prefrence to higher education or gender, etc. S the effects of job training program would not be clear.
ii) The control group would be no training group and treatment group would be the training group.
iii)
iv) Difference in difference effect = (Ue2 - Ue1) - ((Um2-Um1) - (5-6.2)-(4.2-5.8) = 0.4%
Training No training Difference 13 8 5 8 15 -7 15 9 6 12 7 5 13 10 3 11 11 0 Average 2