Instructions for Assignment 1
Econ 3388
September 17, 2020
Objective and Files
This assignment is designed to test your ability to run panel data regressions and descriptive statistics, and for you to demonstrate your understanding of concepts through your written interpretation of the results.
The Mincer model describes the relationship between wage rate, education and experience. The model is heavily used in labour economics. This assignment is an empirical application of the Mincer equation using Canadian data (July 2008). The files for you to complete the assignment are listed below:
• Assignment 1 template.docx: This file is attached, and it is a guide to the format of your submission. Your written part should be from 2 to 5 paragraphs for each section.
• lochner-030404.pdf: Paper on the Mincer equation, by Heckman, Lochner and Todd (2003), describes the model. This reference paper is intended as a starting point for understanding .
• LFSexp_naomit.csv: This file contains all the data required for this assignment. The description of each variable can be found in “REBASED_MICROC_LAYOUT.xlsx”, variables indicated in green. The “Guide for the LFS.pdf” is a complete description of how the data is obtained.
Data Manipulation Instructions
You will have to apply a few data manipulations to transform the data for the Mincer equation. For the simplest version, this includes the log of earnings, and generate dummies for education, province, and sex.
Other data manipulations may be applied.
Estimation Instructions
At a minimum, you must estimate the pooled model, and the panel data models (fixed and random effects) with the heterogeneity based on the province. You must also compare the models using tests: F-test and Hausman test.
You may go beyond these simple estimations, if it is justified.
Submissions
You must summit:
• your completed Assignment 1 Word document
• your data manipulation and estimation file (*.R file for R and RStudio, or *.do file for STATA)
Do NOT upload the data with your submission.
If you have questions, email me at csaund9@uwo.ca and I will respond within 48 hours (not including weekends). Office hours are also available on Wednesday each week.
Charles Saunders