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Unit: Applied Economics ECONM1008

Assessment’s Contribution to Unit: 100 percent

Release Date: 9 December 2022

Submission Date: 16 December 2022

Students are strongly advised to submit their work ahead of the deadline. Should you have a problem with submission

to Blackboard you should email econ-pgt@bristol.ac.uk for guidance immediately.

Your answer should be no more than the number of words specified for each question. Answers much longer

than this are unlikely to be sufficiently concise, whilst answers shorter than this are likely to be missing key

details, and are likely to gain lower intellectual marks

Assignments handed in after the deadline, without a pre-arranged extension, will be subject to late penalties.

Details relating to penalties are at the end of this document.

Please use Arial or Calibri font at 12-point.

Your assignment should be combined into a single document and submitted in pdf format with a document

name containing your student number.

You may include photographs or scans of your own hand-drawn, labelled diagrams or calculations. We would

advise you to generate your own diagrams but if you include diagrams or pictures that you have not produced

yourself, or are modified versions of existing images, you should ensure you reference them appropriately.

Figures and tables should normally be included inline in the text.

Your answer will be assessed using the University Marking Criteria.

This is a piece of COURSEWORK that contributes to your Unit mark and you can:

Use resources to support you in completing your answer.

Draw upon a range of accepted resources including, your own notes, lecture slides/recordings, course material,

textbooks, journal articles, online resources. ALL work should be written in your own words.

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[Document title]

Applied Economics 2022/23 – Summative Assignment

Dear Applied Economics students,

The assignment consists of three parts and we ask you to complete all three parts and all tasks. Together, the three parts

add up to a total of 100 points and determine your final grade.

Please follow the submission guidelines above. Read them carefully. Importantly, you are not allowed to work in groups

and must make an individual submission. We take plagiarism extremely seriously and check every submission with

plagiarism software.

Best of success!

Toman and Hans

[Document title]

Part 1: Microenterprise Training (50 points)

Many people in low-income countries work in the informal sector, in which microenterprises are ubiquitous.

Microenterprises usually generate low profits and have only few if any employees. Making microenterprises more

profitable could potentially transform them into an engine of growth and employment. One idea is that better managerial

know-how and practices might increase their profitability and operational scale. In a study published in the American

Economic Journal: Applied Economics, the economists Wyatt Brooks, Kevin Donovan, and Terence R. Johnson test

whether this idea could work. The article is available on Blackboard. You do not need to read the full article, but you

might find that especially sections one, two, and three (and the introduction) are helpful for answering the tasks.

Task 1.1: What is the research question and hypothesis the authors are testing? (5 points) [at most 100 words]

Task 1.2: Using Stata, replicate Table 3 (OLS Estimates on Profit at Different Time Periods (ANCOVA), p. 207) with the data

provided on Blackboard. Section III.A provides more details on the specification. Use a global to specify the set of control

variables. Use esttab and export the regression table to Word. Your table should look like the original one, but you can

simply use numbers as column titles. Please copy and paste the relevant Stata code and the table it produces below. Do

your results differ from the results published in the original paper? If so, how? (15 points)

Task 1.3: Interpret column 1 of Table 3 (use the estimates published in the paper), with particular emphasis on (i) the

marginal effects, (ii) whether the effects can be interpreted in a causal way, and (iii) whether the coefficients allow us to

identify the effect of actually having attended the business class and having interacted with a mentor (or just an intend-

to-treat effect). (15 points) [at most 250 words]

Task 1.4: Using Stata, replicate Figure 3 (Profit Time Series, p. 206) with the data provided on Blackboard. Your figure

does not need to include the grey rectangle highlighting when the intervention took place. Your legend can also be below

the figure. Please copy and paste the relevant Stata code and the figure it produces below. How does your figure differ

from the figure published in the original paper? (10 points)

Task 1.5: A policymaker in Bangladesh sees the results and wants to introduce a mentorship scheme for male

microentrepreneurs in Bangladesh. What would be your advice? (5 points) [at most 150 words]

Part 2: Cycling to school (36 points)

Ensuring inclusive and equal access to education is high on the global policy agenda. While girls have caught up and even

overtaken boys in many countries, especially at the primary school level, girls still lack behind in many low- and middle-

income countries, especially in secondary schooling and higher education. Policymakers have tried different tools to

increase girls’ enrolment in schooling. Some of these policies aim at increasing demand for schooling by providing cash

transfers to families conditional on their offspring attending schools, and other policies have tried to increase the supply

of schools by constructing more schools. Building new schools is costly, and an alternative way to improve access is to

help students with transportation. In 2006 the Indian state of Bihar therefore gave all girls who enrolled in grade 9 means

to buy a bicycle, which could help them access the school. In a study published in the American Economic Journal: Applied

Economics, the economists Karthik Muralidharan and Nishith Prakash investigate whether this policy worked. The article

is available on Blackboard. You do not need to read the full article, but you might find that especially sections one and

two are helpful for answering the tasks.

Task 2.1: Formulate the evaluation problem using the potential outcome framework: (i) Define the unit of observation, (ii)

define the treatment D, (iii) define the outcome variable(s) of interest Y, (iv) explain which two potential outcomes this

variable can take on for each unit i, (v) explain which of the two potential outcomes is observed for each unit. (12 points)

[at most 150 words]

Task 2.2: The study uses the difference-in-differences approach to identify the causal effect of the cycle program. Using

your own words, explain why we cannot use the increase in female secondary school enrolment from before to after

2006 in Bihar to conclude that the cycling program had a positive effect. Explain how the difference-in-differences

approach is able to address some of the problems of the simple before-after comparison. (12 points) [at most 150 words]

[Document title]

Task 2.3: Muralidharan and Prakash use two control groups: boys and girls in other states of India. They do so, because

they believe that only using boys as a control group leads to a violation of an important assumption behind the

difference-in-differences approach. Explain what this assumption is and how the results in Panel A of Table 1 (Testing the

Parallel Trends Assumption, p. 330) suggest that this assumption would be violated if only using boys as the control

group. (12 points) [at most 150 words]

Part 3: Summer School and Test Scores (R script) (14 points)

The following script follows the example used in the R tutorial that we created for you (see

https://hhsievertsen.github.io/applied_econ_with_r/), where we load and analyze fictitious data on test scores and

summer school attendance and child background.

Task 3.1: In the code block below we run a regression of summer school attendance on controls for student background

and an indicator for receiving the reminder letter. Replace XYZ1, XYZ2, and XYZ3 in the code block below with the correct

code and interpret the results. Your response should start with a list of what you replaced the three elements with (i.e.,

XYZ1=…, XYZ2=…, XYZ3=…). Your response should include the R output. (5 points) [at most 100 words, not counting the R

output and the list of replaced terms]

# Estimate LPM (the first stage)

models<-list(

m1<- XYZ1(summerschool XYZ2 letter,cluster="school_id",data=regdata),

m2<- XYZ1 (summerschool XYZ2 letter+parental_schooling+parental_lincome XYZ3 female,cluster="school_i

d",data=regdata)

)

# Store the mean of dependent variable in a data frame

added_stats<-tibble("Mean of Dep. ",m1=mean(regdata$summerschool),m2=mean(regdata$summerschool))

# Generate table

modelsummary(models, stars = TRUE,statistic = 'std.error',

fmt= '%.4f',add_rows = added_stats,

coef_omit= '(Intercept)', output = 'flextable')

Task 3.2: A policymaker hears about your results in Task 3.1 and states that “The analysis by a Bristol economist shows a

clear positive significant treatment of the summer school.” Explain why this statement is not correct. Because you are a

helpful economist you provide some additional analysis to inform the policymaker. Replace XYZ1, XYZ2, and XYZ3 in the

code block below with the correct code and interpret the results and explain how these results provide insights into the

claim made by the policymaker. Your response should include the R output. (5 points) [at most 100 words, not counting

the R output and the list of replaced terms]

# Ordinary Least Squares regression

model1<-lm(test_score~parental_schooling+parental_lincome+letter+female, XYZ1= XYZ2 (analysisdata,year=

=6))

# Summary of model1

XYZ3 (model1)

Task 3.3: Replace XYZ1 and XYZ2 in the R code below and interpret the findings. Your answer should include the R output.

(4 points) [at most 100 words, not counting the R output and the list of replaced terms]

# Estimate IV specification with feols

m1<-feols(test_score~parental_lincome+female+parental_schooling | # Outcome eq.

0| # Fixed effects

XYZ1~ XYZ2 # First stage

,cluster="school_id" # Cluster var

,data=regdata)

# Summary of results

summary(m1)

[Document title]

Penalties for late work

Assignments handed in after the deadline, without a pre-arranged extension will be subject to the following penalty:

A fixed absolute penalty of 10 marks is applied for each day work is submitted after the agreed submission

deadline. Please note, weekend days count towards the calculation of late penalties, bank holidays and

University closure days do not.

A mark of zero is applied to work submitted five or more days after the agreed deadline if this threshold is not

already reached.

Plagiarism

In academic writing, plagiarism is the inclusion of any idea or any language from someone else without giving due credit

by citing and referencing that source in your work. This applies if the source is print or electronic, published or

unpublished, another student’s work, or any other person.

The University's Examination Regulations state that “Any thesis, dissertation, essay, or other course work must be the

student’s own work and must not contain plagiarised material. Any instance of plagiarism in such coursework will be

treated as an offence under these regulations.” (Section 3.1).

The Examination Regulations give information on the University's procedures for dealing with cases of plagiarism

(Section 4)

More information about plagiarism, and how to avoid it is available from the Library website.

Referencing

If you reference papers in your answers, you should reference them using a consistent referencing system, such as the

Harvard referencing system; you should normally cite sources in the text. As a general rule, you should avoid using

footnotes to reference.

If you include a quote, it should be in quotation marks, and a page number included in the in-text reference.

Whilst you should normally avoid larger quotes, if you include them, you should also indent the text.

If you cite a paper in your essay, you should also include a full reference to the paper in the reference list at the end of

the paper.

Do not list papers in your reference list that you have not referenced in the paper

[Document title]

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