Examination 201022 Flashcards
Visar bild på Cuncha et al (2006) model och figuren med I1/I2 på y-axeln och gamma på x-axeln.
Vi ska
A) förklara slopen för θ = 0 (när den ökar exponentiellt).
B förklara θ =-inf och = 0.99.
In the model, γ represents the relative efficiency of early childhood investment in I1 and θ describes how easy/diffult it is to shift investments across time, in that sense it measures the substitutability or completarity of these investments, i.e, the elasticity of substitution.
A) If θ = 0, (studera hur den I/I påverkas av gamma bara! ) investment I1 och I2 are neither perfect substitutrs or perfect complements, in fact this case lies in between these extreames. The optimality condition becomes γ/(1-γ). This means that the optimal proportion of early and late childhood education invcestment solely depends on the ratio of the relative efficiency to to invest in I1 or I2.
The ratio increases in γ, meaning that for a low level of γ, it is optimal to invest as little I1 and as much I2 as possible, whereas for a high level of γ it……. Här slutar papperet och resten av svaret finns inte med…
B) -inf finns inte på publicerat papper.
Case θ =0.99 represents nearly perfect substitutibility of investment I1 and I2. This means that it is possible to shift education investment across both periods. The optimality condition is then (γ/(1-γ))^1/2.
If the relative efficiency of I1 is lower than 0.5, it is optimal to invest everythiong in period 2. This is sown by the dotted line. If it is higher than 0.5 it is better to invest everything in period 1.
20 poäng
Question 2a)
Vi får ser ekvationen från Nilsson (2017) om alkohol och ska besvara vad de region-by-time, region-by-mother<21 och time-by-mother<21 betyder och ge exempel på varför dessa är inkluderade i regressionsspecifikationen.
Snabb policy bakgrund först.
Nilsson exploits three sourcrs of exogenous variation: across refion, time and age.
The DDD setup controls for manu potential unobserved confounders. Blablabla
The regression includes several fixed effects estimators to controll for observible characteristics. Firt, θrt are region-by-time fixed effects which control for differenal time trends across regions. For example a region might have been adverely affected by the closure of a major factory, leading to unemployed youth pepole in their region to leading to mor alcohol consumption……
Sedan finns det inget mer på den sidan.
Question 2b)
Vi får se quantilgrafen från Nilsson 2017 och ska redogöra detaljerat vad det är vi ser och varför.
In summary, negative earnings effects are found throughout the distribution. The earnings effects likely reflect a reduction in the annual hours worked in the lower half of the distribution.
Sizable reductions in earnings are, however, also found higher up in the distribution where lower wages play a more important role.
A benign interpretation of the differences in the effects on earnings and disposable income is that the welfare state to a large extent has compensated for the policy’s effect on productivity. On the other hand, it is also possible that the generous welfare state arrangements may have exacerbated the effects on earnings by weakening labor supply incentives, by lowering demand for low-skilled workers through high minimum wages, or by weakening parents’ investment incentives (Lindbeck and Nyberg 2006). It is, however, difficult to quantify
the role of these mechanisms with the data at hand. The following sections provide insights into the role of other mediators for which data
are readily available.
Question 3a)
What is the promise of the Sufficient Statistics (SS) method?
The promise of the sufficient statistics metod is to reconcle the transparancy of the reduced form strategies which can be empirically estimated with the analytical clarity of the structural model approaches, which allows for the analysis of welfare effects.
An important concept of the sufficiaent satatistics methos is that a policy effect can be approximated by its direct effect (e.q on tghe goverments budget) i.e the fiorst order effect and that we can neglect second-order effects (e.q on individual behavior) thanks to the envelope theorem, which states that all private decisions are taken optimally such that a small change in a policy has no direct effect because in optimum marginal return is 0. (?) what??
Question 3b)
Which type of questions the SS can be applied to?
The SS method can be percetly applied to policy analysis (or reforms) in situations where there is both social optimalizatioon by the goveernment an provate agens. The SS methos can help establish a simple relationshop between key (policy) variables that allow to … about the policy trade off….. Slut på sida.
Question 3c)
Explain in detail one application of the SS relevant for policymakers.
Ta exemplet med optimal benifit rate
(U’cl - U’ch) / U’ch = (ε,b) /e
e är search effort
Question 3d)
A central bank considers marginally increasing the interest rate.
Write a partial-equilibrium firm profit optimization problem (with capital and labor as two inputs) and drive the effect of the change on the firm’s profit. Then interpret your result in the lens of SS.
Skriver firm maximization problem tar derivatan av profitfunktionen med respekt till K sedan derivatan av profitfunktionen med respekt till ”r
Assuming the neoclassical model of firm profit maximization, an increse in the interest rate makes every unit of capital input more expensive. Leading to less use in capital, cless poduction and less profits than previosly optimal.
Kolla den här mot mikrokursen och se? Jag tänker att man direkt deriverar profitfunktionen med hänseende på r bara….
Question 3e)
A gym that has monopoly power in the city considers increasing its membership fee. But doing that will change the selection of customers, leading to a customers with different needs. How does the SS method can help you in this case?
Finns inget svar till denna….
Question 4 a & b)
Describe the reform and the empirical strategy Grönqvist (2012) use to examine the
effects of the subsidy.
Provide a summary of the results of Grönqvist (2012).
Skriver att man såg efter första subventionen som tog borts att drop i försäljning och att abborter ökade. Man introducerade då en ny tung subvention på P-piller(75%), först i Gävle. Det var en succé vilket gjorde att resten av sverige följde med i början på 1990 talet.
Den empiriska strategin för att estimera effekten abvänder tre dimensioner av exogen variation. 1 Variation mellan regioner. 2 Olika regioner hade olika regler beträffande eligibility och ålder. 3 fattar jag inte, men det borde ju vara timeingen, att de införs vid olika tidpunkter.
DDD strategin som de använder exploaterar alla dessa dimensioner av exogen variation samtidigt som de kontrollerar för aany potential unpbserved copounders.
Grönqvist visar också att försäljningen faktiskt påverkades av prisen. …..
Sedan finns inget mer. Om t.ex resultat osv.
Question 4c)
Discuss the conclusions from his back-of-the-envelope calculations of the cost and benefits of the reform.
According to Grönqvist some potentially important benefits and costs that are not considered in his cost-benefit analysis.
Provide examples of and discuss some of these potentially important unmeasured benefits and costs.
Grönqvist conclusion is that the fenifits and costs of the reform include that the costs of the subsidy are mainly monetary expences to the government while the benifits are from planing parenthgood which has positive individual-level effects. Famility stability etc.
Unplaned early pregnances incire a negative externality to societ as well as due to the face that individuals discount their fututre utility to much.
Personen nämner gender pay gap som en potentiell kostnad.
Något till jag inte ser vad som står….
“The results presented in this paper suggest that subsidized oral contraception may be a
fruitful way to reduce abortions and teenage pregnancies. Still, back-of-the-envelope calculations show that the societal costs of the subsidy by far outweigh its benefits.
In this context it is important to bear in mind that this calculation leaves out potentially important benefits linked to the socioeconomic outcomes of the women that were given expanded access to inexpensive contraception.
There may also be unmeasured benefits for the next generation. If parents invest more in better planned children these kids may for instance be less likely to engage in crime (Joyce and Levitt 2003) and better off in terms of school performance.
Another issue is that is difficult to estimate the monetary value that both women and men assign to using the birth control pill in relation to alternative contraceptive technologies. If individuals place a high value oral contraception then ignoring this will understate the social benefits.
There are also potential costs not included in this analysis.
One cost could be an increased prevalence of sexual transmitted diseases.
Still, the main lesson from the cost-benefit analysis is that any benefits need to be substantial in order for the subsidy to be cost-effective.” Från Grönqvist
Vad säger Exposure variablen och dess koeffecient i Nilsson (2017)? Vad är det för typ av design/ekvation.
EXPOSURE3,r,t,m < 21 is equal to one if the child is born to a mother under the age of 21 at delivery in the treatment regions and conceived between July and October 1967, and otherwise zero;
b3 is the parameter of interest reflecting the impact of the policy on the children who were exposed to the policy from early pregnancy and were born to a young mother.
