Y5

Suppose we want to understand the impact of a federal law mandating health insurance coverage passed in year 2 for employees on wmpanies' prot level. For simplicity, let's assume that there are only two companies, A and B_ Company A did not otter health insurance before the federal law, so they have to update their policy. Company B already offered health insurance before the federal law, so they are not affected. Year _ Prots of Germany A Prots of Company B year 1 10 millions 15 millions year 2 14 millions 21 millions a What is the outcome Y? And what is the treatment? b Can we attribute the change in probility of company A before and after the policy change all to the federal insurance law? And why? (3 Can we attribute the difference in probility of company A compared to company B after the policy change all to the federal insurance law? And why? (:1 Calculate the DiD estimate and interpret it in this problem's context. e Explain what is the parallel trend assumption, and why it is important