Consider the quasi-experiment described in Section 13.4 involving the draft lottery, military service, and civilian earnings. Explain
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Consider the quasi-experiment described in Section 13.4 involving the draft lottery, military service, and civilian earnings. Explain why there might be heterogeneous effects of military service on civilian earnings; that is, explain why \(\beta_{1 i}\) in Equation (13.9) depends on \(i\). Explain why there might be heterogeneous effects of the lottery outcome on the probability of military service; that is, explain why \(\pi_{1 i}\) in Equation (13.11) depends on \(i\). If there are heterogeneous responses of the sort you described, what behavioral parameter is being estimated by the TSLS estimator?
Equation (13.9)
Equation (13.11)
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