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In March 2021, State A in Gemany implemented a mandatory motivation programme for its welfare recipients, requiring them to listen to a monthly afternoon motivation speech to inspire them to search harder for work. Neighbouring State B did not change anything about its welfare programme over the period considered. The average monthly earnings for a welfare recipient in State A were 2,400 Euros in February 2021 and 2,200 Euros in June 2021. The average monthly earnings for a welfare recipient in State B were 1,800 Euros in February 2021 and 1,500 Euros in June 2021. (a) What is the difference in difference estimate of the effect of the motivation programme on earnings? (b) Suppose you are given the individual earnings data for State A and State B. Provide the regression equation for which the corresponding OLS estimator will deliver the estimate you reported in (a). (c) Which coefficient in this regression is estimated by the difference in difference estimator? (d) One critic mentions that seasonal variation in jobs could cause a problem in the difference in difference estimator. How would you respond? (e) Another critic points out that the work force in State A is on average better educated than the one in State B and that earnings growth lately has been higher for workers with high levels of education. If this is true then what is the sign of the bias of the difference in difference estimator? (f) You decide to collect data on inviduals' level of education in addition to their earnings. Write up a new regression equation whose OLS estimator will not suffer from the potential bias you discussed in (e).