This assignment is 3200 words excluding any graphs and tables. It is an advanced econometrics assignment and it is due 15th of April. This should be done by someone who is an expert in STATA 14 program. He will have to download data, read the instructions carefully. Attached are the lecture notes and he can choose any method he wants to do this assignment. but he must write which way he will be using in order to keep track of the numbers and variables. he must be extremely careful when picking the variable because if anything went wrong the whole assignment will be wrong.
Also these are some questions asked to the prof and the answers as well.
Questions and answers:
Q1: On the assigned year/wave.
A1: We call these year ‘wave’ to reflect their collection time, not what the data tell us. For example, the 2003 wave was collected in 2003, but tell us information in 2002 real time. The PSID does not conduct the family survey every year. Hence, some waves are not available. Please stick to the wave assigned to you in the table.
Q2: Also, could you please clarify if the bibliography is included or excluded in the word limit.
A2: it is excluded
Q3:, I’ve found two wage rates in the survey, an actual wage and an average wage.
The average wage rate is the total labour income divided by the the total hours worked in that year. So it is the average amount paid per hour of work.
The actual wage is the wage rate for regular work time. So it is the amount paid per hour of work, conditional on 1) the individual is paid by the hour (if otherwise it = 0), and 2) that hour is “regular” (if otherwise the observation is wrong for that “irregular” hour).
It seems to make much more sense to use the average hourly wage because using the actual hourly wage will lead to a sample selection of only individuals who are paid by the hour, and the measurement will be wrong if there are some irregularly paid hours. Although the average wage has the drawback of aggregating over different parts of labour income which might not reflect the expected marginal wage that any other individual could obtain in the labour market for the same type of employment.
Could you offer some advice on this? Clearly it would be very bad if I got this part of the project wrong!
A3: The average wage rate is commonly used, see Data Appendix of Blau, Francine D. and Kahn, Lawrence M. 2007. Changes in the labor supply behaviour of married women: 1980-2000. Journal of Labor Economics, 25, 393-438. Note the possible measurement issue of this average is discussed in Section 2 of Heim, Bradley T. 2007. The incredible shrinking elasticities. Journal of Human Resources, 42, 881-918.