Maternity Benefits Consider a maternity benefit program that provides payments to mothers who take time off after the birth of a child. Assume the following for the first three questions in this problem set: There are two types of workers: o CB (child-bearing) workers are eligible and claim maternity benefits with probability probcB o NCB (non-child-bearing) workers who are not eligible for maternity benefits (because they will never give birth) CB workers who give birth receive a benefit of v 1. Suppose that the government requires firms to provide maternity benefits to mothers that they employ How would you expect this maternity benefit program to affect the following outcomes in firms that hire only CB workers? Illustrate your answers using one or more clearly labeled diagrams. a) the level of employment b) the wage received by workers c) the cost of labour to firms d) the total value of compensation received by workers e) the total amount of the tax received or subsidy paid 2. Suppose that the government requires firms to provide maternity benefits to mothers that they employ. How would you expect this maternity benefit program to affect the following outcomes in firms that hire only NCB workers? Illustrate your answers using one or more clearly labeled diagrams. a) the level of employment b) the wage received by workers c) the cost of labour to firms d) the total value of compensation received by workers e) the total amount of the tax received or subsidy paid3. Consider Gruber's empirical analysis of the effect of state legislation requiring that firms include costs associated with pregnancy and childbirth in employer-provided health insurance policies on the hourly wages of women of child-bearing age a) How does he construct his FD estimator of the effect of interest? Explain. b ) What is the identifying assumption (the thing that you have to believe in order to be convinced that this is a credible estimate of the causal effect of interest)? c) How does he construct his DD estimator of the effect of interest? Explain. d) What is the identifying assumption (the thing that you have to believe in order to be convinced that this is a credible estimate of the causal effect of interest)? TABLE 3-DDD ESTIMATES OF THE IMPACT OF STATE MANDATES ON HOURLY WAGES Before law After law Time difference Location/ year change change for location A. Treatment Individuals. Married Women, 20-40 Years Old: Experimental states 1.547 1.513 - 0.034 (0.012) (0.012) (0.017) [1,400] [1,496] Nonexperimental states 1.369 1.397 0.028 (0.010) (0.010) 0.014) [1,480] [1,640] Location difference at a point in time: 0.178 0.116 (0.016) (0.015) Difference-in-difference: - 0.062 (0.022) B. Control Group: Over 40 and Single Males 20-40: Experimental states 1.759 1.748 -0.011 (0.007) (0.007) (0.010) [S,624] [5,407] Nonexperimental states 1.630 1.627 -0.003 (0.007) (0.007) (0.010) [4,959 [4,928] Location difference at a point in time: 0.129 0.12 (0.010) 0.010) Difference-in-difference: - 0.008: (0.014) DDD: -0.054 (0.026) 4. Consider Gruber's empirical analysis of the effect of state legislation requiring that firms include costs associated with pregnancy and childbirth in employer-provided health insurance policies on the hourly wages of women of child-bearing age Are his estimates consistent with what theory predicts? Explain with reference to carefully