''5)

''Now consider only people who were young enough to be exposed to the INPRES program. What is the

average difference in education between such people in regions with high and low program intensity?

(Please round to the nearest hundredth).

Thought exercise: Under what assumptions would this be an unbiased estimate of the causal effect of

the program on education? Do you think this is an unbiased estimate in this case?''

11)

''We can also compute the Wald estimate using IV regression. In an IV-DD setup, the two main effect

terms (i.e. program intensity and age of exposure) are included as controls and the variable representing the treatment (i.e. the interaction term) is used as the instrument. That is, the two stages of the regression are where is the first-stage effect of the program on schooling and

is our IV estimate of the causal effect of schooling on log earnings. Hint: use ivreg() in R.

Run the regression corresponding to this Wald estimate and confirm that it returns the same value.

What is the coefficient, and what is the standard error? (Please provide your answer to three decimal

places.)''