This Homework is based on the paper: The China Syndrome: Local Labor Market Effects of Import Competition in the United States, AER (2013). as in your Week 12 recitation. The authors begin by proposing a simple measure of the growth China's local import penetration into a local market in the US: L,-j-, Mujt Lujg L,; ATPW =3 7 where: . Mmjt is the growth in overall imports from China to the US in industry j s Ly is total employment in local labor market i at the start of period . L.-_,-g is total employment in market 1 in industry j at the start of period . L\"jt is total employment in the US in industry j at the start of period The authors estimate a series of specifications of the form: AYi = 7 + B1ATPWog + Xiyfo + it where are the outcomes of interest. To isolate the portion of the change in import competition that is due to the supply side, the authors construct an instrumental variable: Lije1 AMyy Ly 1 Ly AIPWo = J where: * AM_;is the change in China's exports to other high income countries. . Lij:l is lagged employment and so on. Recall the following from recitation: 1. change in manufacturing is given by the variable d_sh_empl_mfg 2. the change in import exposure is d_tradeusch_pw 3. the predicted change given global trends (the instrument) is d_tradeotch_pw_lag 4. local labor markets are defined at the commuting zone level, and so each observation in the regressions is weighted using population share of the CZ, given by timeputas o, . standard errors are clustered by state level 6. Other control variables that you may need are explained in Recitation, or listed below. QUESTION 1 Reproduce Figure 2 Panel B from the paper (in the same way that we replicated Panel A in recitation). QUESTION 2: 1. Use the fixest package to replicate the estimates from Column (6) of Table 3. Some notes on additional variables you will need (beyond what you saw in recitation): e 1 _sh_routine33 is the percentage of employment in routine occupations * 1_task_outsource is the average offshoreability of occupations in the CZ at the beginning of the period. 2. By reading the paper, briefly explain the logic of including the perecnt of employment in routine occupations and the average measure of offshoreability