Assignment 3 Create a single pdf file to answer all the following questions. Ensure that your name is on the top of your generated PDF file. Upload your file to Quercus no later than 17:00 PM EST on...

Assignment 3

1. 
   

   Create a single pdf file to answer all the following questions.
   

   
   


2. 
   

   Ensure that your name is on the top of your generated PDF file.
   

   
   


3. 
   

   Upload your file to Quercus no later than 17:00 PM EST on Nov 11, 2021.
   

   
   


4. 
   

   Total points: 10. Marks for each question are listed in the square brackets.
   

   
   

This assignment asks you to come up with a mini research proposal to analyze a policy question using the policy evaluation techniques discussed in the first half of D11. Find a policy that is discussed in a newspaper this year that interests you. It can be a public policy (decided by a local or central government) or a private policy (decided by a firm). It doesn’t have to be implemented yet and it doesn’t have to be restricted to a policy in Canada.

1. 
   

   (i) [1] Use a few sentences to explain the policy. You also need to provide one reference that discusses this policy (a link to a news article that covers this policy would suffice). It has to be a policy under discussion or just implemented this year (Jan 2021 to now).
   

   
   


2. 
   

   (ii) [1] Choose one outcome variable that can be affected by the policy and briefly explain what effect you expect to be and why.
   

   
   


3. 
   

   (iii) [1] Define your research question based on your answers to part (i) and (ii). It will be something like: how does x (the policy you discussed) affect y (the outcome variable you choose)?
   

   
   


4. 
   

   (iv) [2] To understand the effect of the policy on the outcome variable of interest, we need to choose the proper the unit of analysis (individuals, firms, cities, etc.) and define the main explanatory variable. For this question, first, define your unit of analysis and the main explanatory variable. Next, explain how to construct the main explanatory variable. Please be as clear as possible, such that after reading the description, it is clear what data needs to be used.
   

   
   


5. 
   

   (v) [1] Write down the regression model that you plan to use to answer the research question. Assume that you can have any type of data. Carefully define each variable and subscripts you use in the regression.
   

   
   


6. 
   

   (vi) [1] Which coefficient will tell you the impact of the policy on the outcome variable of interest?
   

   
   


7. 
   

   (vii) [1] What are the assumptions you make in order to get an unbiased estimation of the coefficient in part (vi)?
   

   
   


8. 
   

   (viii) [2] Come up with one case that can invalidate your identification assumption in part (vii) and hence bias the estimation result. Explain why this threat will bias the estimation result.

   
   


9. 
   

   
   

   
   

   For example, in Lecture 6, we discussed the designation of enterprise zones in Indiana. We want to know the impact of this policy on unemployment claims. This policy was implemented at the city level – some cities got the EZ while others didn’t. Therefore, it is natural to define the unit of analysis as cities in Indiana. The treatment group has cities that got the EZ while the control group has cities that did not have the EZ. We can use DID to study the impact of the EZ on the unemployment claims of a city.
   

   
   

   A few more example policies (that came out in earlier years):
   

   
   

   o How does the entry of UBER affect housing prices of neighborhoods?
   - Neighborhoods with poor public transportation access benefit more, neighborhoods
   

   
   

   next to subway stations benefit less.
   o How does the trade war between US and China affect US firms?
   

   
   

   - Increase in export tariff can hurt US firms that export products to China.

   
   


10.