Exam 3: Empirical Tools of Public Finance

You observe in the data that two variables move together.However,since you'd like to know whether a movement in one variable causes movement in the other,you must solve a(n):

Suppose that in order to determine how non-labor income affects labor supply,you give everyone born on an even-numbered day in August of 1979 $1,000 per year and look at how they change their labor supply compared to people born on odd-numbered days in August of 1979.This approach is which of the following?

Suppose an empirical researcher is interested in analyzing the impact of restricting HMO membership on insurance rates among workers.The researcher noticed that one state passed a law that restricted HMO membership and an otherwise similar state did not pass such a law.Which empirical approach would be best suited to this analysis?

Randomized trials and quasi-experiments:

Suppose that job training is randomly assigned among applicants.The people who receive the training form the _______ group; the people who do not receive training form the _______ group.

Suppose that a study were to estimate the effect of public smoking bans by looking at the rates of smoking across states over time when some of those states adopt smoking bans.The study takes which approach?

Which of the following would be the most useful source of time series variation with which to identify the effect of income guarantees on labor supply?

Name one potential problem that could lead to biased results if you were to identify the effect of attending a charter school by comparing the scores of students from the charter schools with the scores of students from traditional public schools.

Suppose a state were to cut the welfare guarantee 30% between 2012 and 2014.Furthermore,suppose that hours of work per year among single mothers rose 20%.Use the time series estimate of the effect to come up with an elasticity of total hours worked with respect to benefits.

Which empirical approach would be best suited to estimating the effect of the job-training program on earnings?

Any source of difference between treatment and control groups that is correlated with the treatment but is not a result of the treatment is called:

An empirical researcher decides to identify the effect of parental divorce on children's high school graduation by comparing children whose parents divorced with children whose parents remained married,controlling for other observable characteristics.This empirical approach can best be characterized as:

An empirical researcher wants to identify the effect of HMO membership on health care costs and does so by comparing costs with membership across the states.This approach is best characterized as:

A statistical method used for assessing the relationship between two variables while holding other factors constant is called:

(a)Suppose more students wanted to attend a charter school than the charter school could accept,and you wanted to identify the effect of attending charter school by comparing the outcomes of students who attended charter school with those of students who wanted to but could not.Would a quasi-experimental approach be acceptable if the charter school accepted students on the basis of their characteristics? (b)Would your answer to (a)change if students were accepted on the basis of a lottery instead?

Suppose a state were to cut the welfare guarantee from $6,000 to $3,000 between 2012 and 2014.Furthermore,suppose that hours of work per year among single mothers rose from 900 to 1,200.Which of the following must be TRUE if the time series estimate of the effect of the reduction in the guarantee is to be unbiased?

Suppose an empirical economist estimates underlying features of utility functions.Which type of empirical analysis would this researcher be most likely to be engaged in?

To produce structural estimates,which of the following must be TRUE?

Suppose one study uses data on prices and cigarette smoking behavior to estimate the overall effect of cigarette-price changes on smoking,while another uses the same data to decompose the effect into income and substitution effects.The first study provides _________ estimates; the second provides __________ estimates.

Suppose 15 states pass a law that limits trial lawyers' compensation.No such law passed in the other 35 states.Suppose that the value of all malpractice suits goes from an average of $2.4 billion to $2.8 billion in those 15 states and goes from $2.3 billion to $2.6 billion in the 35 states,over the time in which the laws were passed.What is the difference-in-difference estimator of the effect of these laws?