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.
Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter12: Probability
Section12.3: Conditional Probability; Independent Events; Bayes' Theorem
Problem 54E: Cigarette Smokers The following table gives a recent estimate in millions of the smoking status...
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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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