Economics 350, Winter 2021: Problem Sets

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Problem Set Submission Instructions:

1. Please feel free to submit your problem sets in groups of up to 4 people. Write the names of all of your collaborators at the top of your problem set.
2. Please submit typed solutions. Number or label the question or the part of the question you are answering.
3. Only one person from each group needs to submit a problem set. Please submit via Canvas.

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Problem Set 1

• Assigned: January 13, 2021
• Due: January 20, 2021
• Related Resources:
  • Data:
    • Go to the “NLSY79 investigator” webpage here to download the NLSY79 data. Notice that if you do not have an account, you need to register. In the worst case scenario, approval may take a number of days, so register to the website early! (If you have a problem, please contact the TA). Once you are logged in, choose “NLSY79
      (National longitude Survey of Youth 79). You would then need to choose which variables you need to download to answer the questions in this PS. In your answers please list which variables you chose, and
      what data cleaning process were applied.
  • Handout:
    • The Rate of Return to Schooling: The Mincer Equation and Beyond

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Problem Set 2

• Assigned: January 20, 2021
• Due: January 27, 2021
• Related Resources:
  • Papers:
    • Acemoglu, Daron and David Autor. (2011). “Skills, Tasks and Technologies: Implications for Employment and Earnings,” In: Orley Ashenfelter and David Card, (eds.), Handbook of Labor Economics, Volume 4, Part B, Chapter 12. Amsterdam: Elsevier. pp. 1043-1171.
    • Deming, David J. (2017). “The Growing Importance of Social Skills in the Labor Market,” Quarterly Journal of Economics, 132(4): 1593–1640.
    • Heckman, James J., and Guilherme Sedlacek. (1985). “Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-Selection in the Labor Market.” Journal of Political Economy, 93(6):1077-1125.
  • Handout:
    •   Two Interpretations of the Mincer Equation Learning-by-doing vs. On-the-job Training

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Problem Set 3

• Assigned: January 27, 2021
• Due: February 3, 2021
• Related Resources:
  • Handouts:
    • Rate of Return Continuation Values and Option Values in a Simple Dynamic Model
    • Notes on Identification of the Roy Model and the Generalized Roy Model
    • Notes on “Differential Rents and the Distribution of Earnings”

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Problem Set 4

• Assigned: Februrary 3, 2021
• Due: February 10, 2021
• Related Resources:
  • Readings:
    • Bayer, Patrick, and Kerwin Kofi Charles. (2018). “Divergent Paths: A New Perspective on Earnings Differences Between Black and White Men Since 1940.” The Quarterly Journal of Economics, 133(3):1459-1501.
    • Caines, Colin, Florian Hoffmann, and Gueorgui Kambourov (2017). “Does Automation Drive the Labor Market?,” IFDP Notes. Washington: Board of Governors of the Federal Reserve System.
    • Maasoumi, Esfandiar, and Le Wang. (2019). “The Gender Gap between Earnings Distributions.” Journal of Political Economy, 127(5):2438-2504.
    • Mulligan, Casey B., and Yona Rubinstein. (2008). “Selection, Investment, and Women’s Relative Wages over Time.” The Quarterly Journal of Economics, 123(3):1061-1110.

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  Problem Set 5

• Assigned: February 10, 2021
• Due: February 17, 2021
• Related Resources:
  • Readings:
    • Deming, David J. (2017). “The Growing Importance of Social Skills in the Labor Market,” Quarterly Journal of Economics, 132(4): 1593–1640.
    • Kosse, Fabian, Thomas Deckers, Pia Pinger, Hannah Schildberg-Hörisch, and Armin Falk. (2020). “The Formation of Prosociality: Causal Evidence on the Role of Social Environment.” Journal of Political Economy, 128(2):434-467.
  • Handouts:
    • Black-White Inequality

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  Problem Set 6

• Assigned: February 17, 2021
• Due: February 24, 2021
• Related Resources:
  • Readings:
    • Abbott, Brant and Giovanni Gallipoli. (2019). “Permanent-Income Inequality,” Unpublished manuscript, Queen’s University, Department of Economics.
    • Chetty, Raj, and Nathaniel Hendren. (2018). “The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects.” Quarterly Journal of Economics, 133(3):1107-1162.
    • Chetty, Raj, and Nathaniel Hendren. (2018). “The Impacts of Neighborhoods on Intergenerational Mobility II: County-Level Estimates.” Quarterly Journal of Economics, 133(3):1163-1228.
    • Chetty, Raj, Nathaniel Hendren, Maggie R Jones, and Sonya R Porter. (2020). “Race and Economic Opportunity in the United States: an Intergenerational Perspective.” The Quarterly Journal of Economics, 135(2):711-783.
    • Hryshko, Dmytro. (2012). “Labor Income Profiles Are Not Heterogeneous: Evidence from Income Growth Rates,” Quantitative Economics, 3(2): 177-209.
    • Huggett, Mark, and Greg Kaplan. (2016). “How large is the stock component of human capital?” Review of Economic Dynamics, 22:21-51.
    • Moffitt, Robert, and Sisi Zhang. (2018). “Income Volatility and the PSID: Past Research and New Results.” AEA Papers and Proceedings, 108:277-80.

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Problem Set 7

• Assigned: February 25, 2021
• Due: March 5, 2021
• Related Resources:
  • Readings:
    • Becker, Gary S., Scott Duke Kominers, Kevin M. Murphy, and Jörg L. Spenkuch. (2018). “A Theory of Intergenerational Mobility.” Journal of Political Economy,126(S1):S7-S25.
    • Chetty, Raj, and Nathaniel Hendren. (2018). “The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure Effects.” Quarterly Journal of Economics, 133(3):1107-1162.
    • Chetty, Raj, and Nathaniel Hendren. (2018). “The Impacts of Neighborhoods on Intergenerational Mobility II: County-Level Estimates.” Quarterly Journal of Economics, 133(3):1163-1228.
    • Chetty, Raj, Nathaniel Hendren, Maggie R Jones, and Sonya R Porter. (2020). “Race and Economic Opportunity in the United States: an Intergenerational Perspective.” The Quarterly Journal of Economics, 135(2):711-783.
    • Cunha, Flavio and James J. Heckman (2007). “The Technology of Skill Formation,” American Economic Review, 97(2):31-47.
    • Del Boca, Daniela, Christopher Flinn, and Matthew Wiswall. (2014). “Household Choices and Child Development.” The Review of Economic Studies, 81(1):137-185.
    • Durlauf, S. and A. Seshadri. (2018). “Understanding the Great Gatsby Curve,” In NBER Macroeconomics Annual 2017, volume 32, Martin Eichenbaum and Jonathan A. Parker, editors, pp. 333 – 393.
  • Website:
    • Baby’s First Years Project

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Problem Set 8

• Assigned: March 3, 2021
• Due: March 12, 2021

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Final Exam

• Assigned: March 12, 2021
• Due: March 19, 2021, 11:59pm
• Instructions:
  • Answer all the questions below. Exams should be typed using 12-pt Serif fonts (such as Times New Roman, Garamond, Georgia),1-inch margins, double-spaced, and should be no more than 25 pages. Exam material over 25 pages (including appendices) will not be read.
• Related Resources:
  • Becker, G. S. (1964). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education (1 ed.). Chicago: University of Chicago Press for the National Bureau of Economic Research.