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I
Introduction
As part of the course, you are required to write two individual projects that demonstrate your ability
to use econometric techniques in a practical context. The project will count for 40% of the course
grade.
You will be expected to analyze one of two data sets provided and write up an empirical project
based on this. Below you will find a description of the two data sets and a brief discussion of the
relevant research question. You must choose one of these two data sets.
Organization and Description of the Project
Two main skills are necessary to complete this project successfully. The first is an appropriate
usage of econometric models and techniques. The second skill is an application of these methods
in a sensible way and write-up the results in a clear and concise fashion.
In light of these considerations, I suggest that the project consists of two parts. Part 1 should be a
short (approximately one quarter of the project) description of what econometric model (or
models) and methods you propose to use and why you think they are appropriate. If you plan to
do hypothesis testing, explain which tests you want to do and why.
Part 2 is the heart of the project. It should present empirical results and discuss them. It is a key
part of the assessment for you to demonstrate the ability to estimate your econometric models and
write up the results sensibly. The course lecture slides and textbooks give examples how empirical
results are organized and discussed. The following are some general recommendations as to how
you can format your empirical results section.
Your end goal will be a model that you must justify as being your preferred model. The main part
of your empirical results section will involve presenting a table containing estimated coefficients
for this preferred model and discussing the implications of the results. Depending on the project
topic chosen, you may wish to go beyond simply presenting a table of estimated coefficients and
present tables or graphs of other features of interest (you can see in the empirical examples in my
lecture slides some illustrations of what features of interest may be relevant).
However, before you get to this main part of the empirical results section, you should present
evidence on why you choose your preferred model. Exactly what this evidence will be will depend
on your project topic. However, it will involve estimating some preliminary models, doing some
hypothesis tests or model selection procedures. Your project should describe all this preliminary
material in a clear and succinct fashion.
Since I am providing you with the data set and a brief introduction to the research question of
interest, your project should not include a data description section nor an introduction.
This should be enough information for you to write your project. The description of the data-sets
are presented in a separate file.
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Grading Criteria
Part 1 of the project will receive 25% of the grade, with Part 2 receiving the remaining 75%. Within
Part 2, grades will be allocated for:
i) correct use of Gretl to implement the relevant econometrics,
ii) correct and clear motivation description of the steps leading up to your preferred model
iii) discussion of the results of your preferred model.
These three aspects of Part 2 will receive equal weight in the assessment.
Assignment Submission Instructions
The maximum number of words is 2000. Any words after the 2,000 will not be marked. The due
date is 15.12.2017 midnight. Works have be submitted electronically on my e-mail
240077@mail.muni.cz. No late submissions are accepted.
You are encouraged to work in a group of up to 3 people. However, individual submissions are
also possible. Only one submission from a group is required. The grade will be equally assigned
to the group members.
II
Project Topics (Based on Wooldridge)
Topic 1: Female Labor Force Participation
Background
Economists are interested in the factors that determine a woman’s decision to enter the labor force
and, if she does, what are the returns to schooling. With this research question in mind, this project
uses a data set taken
The file MROZ.RAW includes data on hours worked for 753 married women, 428 of whom
worked for a wage outside the home during the year; 325 of the women worked zero hours. For
the women who worked positive hours, the range is broad, extending from 12 to 4,950.
In this project, you are asked to use an appropriate econometric model (or more than one model)
to shed light on the determinants of female labor market participation and returns to schooling for
females.
For instance, you can model a woman’s decision to be in the labor force as a function of
explanatory variables. Alternatively, one can estimate the returns to one additional year of
schooling.
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Topic 2: What factors affect student performance at public schools? (Based on Wooldridge)
Background
It is fairly easy to get school-level or at least district-level data in most states. Does spending per
student matter? Do student-teacher ratios have any effects? It is difficult to estimate ceteris paribus
effects because spending is related to other factors, such as family incomes or poverty rates. The
data set MEAP93.RAW, for Michigan high schools, contains a measure of the poverty rates.
Another possibility is to use panel data, or to at least control for a previous year’s performance
measure (such as average test score or percentage of students passing an exam).
You can look at less obvious factors that affect student performance. For example, after controlling
for income, does family structure matter? Perhaps families with two parents, but only one working
for a wage, have a positive effect on performance. (There could be at least two channels: parents
spend more time with the children, and they might volunteer at school.) What about the effect of
single-parent households, controlling for income and other factors? You can merge census data for
one or two years with school district data.
Do public schools with more private schools nearby better educate their students because of
competition? There is a tricky simultaneity issue here because private schools are probably located
in areas where the public schools are already poor. Hoxby (1994) used an instrumental variables
approach, where population proportions of various religions were IVs for the number of private
schools. Rouse (1998) studied a different question: Did students who were able to attend a private
school due to the Milwaukee voucher program perform better than those who did not? She used
panel data and was able to control for an unobserved student effect.
Note that the presented questions are just a subset of all available ones that one can explore using
these datasets. Therefore, you are strongly encouraged to extend your analysis beyond the
suggestions. Make sure that you present all your reasoning why you choose one model over
another.
Good Luck!
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