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C171/151 - ECONOMIC DEVELOPMENT SPRING 2020 Problem Set 2 -- Due at the beginning of your assigned sections in Week starting Mon 13 April - (Please avoid hand-written answers if possible.) Question 1 In regression equation (3) of the "Worms" paper (Kremer and Miguel, 2004), the authors compare pupils in schools assigned to Group 1 relative to pupils in schools assigned to Group 2 at the end of the first year of the intervention. Schools in Group 1 had been treated by that time, and schools in Group 2 were about to receive the treatment, but had not yet been treated during the first year. (3) Yjjs = a + B1 . This + b, . DIij + b2 . (Tiit * Di; ) + X;8 + [ ( Ya . Nal ) + [(da . Nais ) tu; + egg. i = school j = student t = survey round (only one period here at the end of first year) d = distance range from school Y = student health outcome alpha = intercept/constant T1 = 1 if school assigned to Group 1 and 0 if school assigned to Group 2 D = 1 if student actually receives treatment as part of Group 1 or Group 2 X = student, school and time controls N = number of pupils within distance d N_T = number of pupils in treated schools within distance d u and e = error term/residual The authors then report estimation results from the following two regressions (displayed in the table below). Both regressions include only one cross-section of pupil data on health outcomes that were measured at the end of the first year (beginning of 1999). At that time, no schools in Group 2 had been treated yet, and the furture treatment status D of students going to schools in Group 2 was measured in the second round after this data on health outcomes had been collected.Any moderate-heavy helminth infection, 1999 (1) (2) Indicator for Group 1 (1998 Treatment) School -0.25 -0.12 (0.07) Group 1 pupils within 3 km (per 1000 pupils) (0.05) -0.26"* -0.26" (0.09) (0.09) Group 1 pupils within 3-6 km (per 1000 pupils) -0.14" -0.13** Total pupils within 3 km (per 1000 pupils) (0.06) (0.06) 0.11 0.11' (0.04) (0.04) Total pupils within 3-6 km (per 1000 pupils) 0.13" 0.13" (0.06) (0.06) Received first year of deworming treatment, when -0.06 offered (1998 for Group 1, 1999 for Group 2) (0.03) (Group 1 Indicator) * Received treatment, when offered -0.14' (0.07) Grade indicators, school assistance controls, district Yes Yes exam score control Number of observations 2328 2328 Mean of dependent variable 0.41 0.41 a) Which one of these two columns corresponds to regression equation (3) above? Using the same variable notation as above, write down the regression equation of the other column. b) Using the results in column 1, how would you compute the average effect of the intervention in treatment schools after the first year? Would this estimate be likely equal, larger or smaller than that of a simple difference in health outcomes between treatment and control groups at the end of the first year, and why? c) Interpret the final two regression coefficients of Column 1, and comment on their level of statistical significance. Explain why the authors include these two variables in the regression. d) Using the results in column 2, how would you compute the average effect of the intervention after one year for children in treatment schools who did not receive the de-worming medicine? How is this different from the effect for children in treatment schools who did receive the medicine