''Duflo estimates the causal effect of education on earnings in Indonesia by looking at the impact of a school building policy. She uses a difference-in-differences strategy to find the effect of the policy on education and earnings, and then uses the policy as an instrumental variable to estimate the causal effect of education on earnings. We will replicate these steps. (You will get slightly different numbers because we are not worrying about survey weights).''

Question 3

9 points possible (graded)

''First we will estimate the impact of the program on educational attainment using difference in differences. People born in 1968 or later were exposed to the program. Generate a dummy variable that takes the value 1 if the person was born in these years and 0 otherwise. We will construct a difference-in-differences table with four cells across low/high program intensity and old/young (unexposed/exposed). Fill in the table with the average education level for that group. Your table should be similar to Table 3 Panel A in the paper. For now, do not worry about standard errors. (Please round to the nearest hundredth. For instance, 67.89 would be accepted if the correct answer is 67.8912.)''

A

B

C

D

E

F

G

H

I

	High Intensity (Treatment)	Low Intensity (Control)	Difference (Treatment-Control)
Young (Born 1968 or later)	A	B	C
Old (Born before 1968)	D	E	F
Difference (Young - Old)	G	H	I