ECON 151 Lecture Notes - Lecture 12: General Equilibrium Theory
11 Nov 2020
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High programs target poorer regions (column 1) Low programs target richer regions (column 2) Diff of difference = 0. 12 = b dd. Tells you that the program has increased the average # of years by 0. 12 years (assuming common trend assumption) not exactly significant so we can"t draw any conclusions but still show that something is going on. Wages in 1990 - diff in diff. Average salary in poor regions = 6. 61. Average salary in richer regions = 6. 73. Diff and diff = +0. 026 = positive effect on wages. At 0. 12 years gives you 0. 026 wages. So 1 year of education = % wage. Diff in diff = 2 dimensions, 2 differences. 1 year of education = 2. 6/0. 12 1 year edu = 21% increase. For graphs = diff between two points at same time (x) Did estimate wage = 0. 026 log wage. Return to education is thus: 0. 026/0. 12=22. % (wald estimate) Higher than the one estimates elsewhere (see psacharoupoulous)
