Final Project

Write a short paper (6-7 pages plus tables) on an economic topic.  Alternatively, if you cannot think of a good idea, I will provide a dataset from the 2013 March CPS to estimate the returns to education.  Chapter 19 in the text discusses carrying out an empirical project and has many helpful hints. For this project you do not need to include a literature review, since the focus is more on the process of doing empirical work.  Note that there is no one “right answer” for what dependent variable or key explanatory variables to choose. What is important is to think about what question the model you choose is answering, and to properly interpret your results in that context. Please consider whether it makes sense to consider your model to have a causal interpretation.

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Before running regressions, think about what you want to model. A good way to start is to come up with a conceptual model. That is, think about what types of things you think affect your outcome measure. Then look and see how each concept can be captured by the data. Variables that might affect your dependent variable include work experience, race, sex, current family status, etc.  Your paper should then discuss the theory/common sense behind your choices of variables to use in the estimated models. After coming up with a conceptual model and a base model specification, you need to estimate the model and do some specification checking. Estimating this final specification of the model is not all though. You will still need to consider whether there are any problems with the estimated model that interfere with your ability to make proper inferences. It will be appropriate to test for and correct any such problems. If there are weaknesses that you are unable to address with these data, discuss what kind of additional data would be useful and how that data would help to solve your problem.

You must maintain log files with not only the results presented in the paper, but with any other Stata commands used to define variables, perform tests, etc.  Within the actual paper, you’ll want to present your estimated models and also descriptive statistics (mean, standard deviation, maximum, minimum) for all of the variables used in these models. Note that you want to look at these statistics to see if they make sense.  Please attach your Stata code to your final paper.

The paper should be structured in the following way.

I.                    Introduction (Summary of why this is an important economic question)

II.                  Data (Describe your summary statistics)

III.                Model Specification (Describe your estimation strategy)

IV.                Results (Interpretation about different subgroups, etc.)

V.                  Caveats and Limitations

VI.                Conclusion

VII.              Appendix (At the minimum, should include summary statistics and regression results tables)


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