Suppose that in New Jersey a compulsory schooling law was implemented that increased years of education. In Pennsylvania, there was no change to the law. We have data on New Jersey and Pennsylvania for cohorts before and after the law change.

Using a difference-in-difference estimator, calculate the average returns to a year of education.

|Suppose that in New Jersey a compulsory schooling law was implemented that increased years of education. In Pennsylvania, there was no change to the law. We have data on New Jersey and Pennsylvania for cohorts before and after the law change. Cohort Average Years of Education Average Wages New Jersey Before 10 $15,000 New Jersey After 11.5 $18,200 Pennsylvania Before 9.6 $13,300 Pennsylvania After 9.9 $15,300 a. (12 points) Using a difference-in-difference estimator, calculate the average returns to a year of education