The dataset we use in this project is from the United States. Namely we will use the current population survey (CPS), a standard source for statistical analysis in the U.S. The CPS is a surv
economics multi-part question and need the explanation and answer to help me learn.
In this project we study two aspects of fertility that have been the focus of a lot of research in economics. In the first part we are interested in learning whether there is a relationship between fertility (how many children people have) and the business cycle. In the second part, we want to know whether there is a relationship between income and fertility. As you will see below we will approach these questions quite casually in this project because the focus is on applying the empirical methods we cover in this course.
The dataset we use in this project is from the United States. Namely we will use the current population survey (CPS), a standard source for statistical analysis in the U.S. The CPS is a survey that interviews a cross-sectional sample representative for the U.S. population. We will use the ASEC annual supplement of the CPS, so we refer to our dataset here as ASEC-CPS. From this dataset we will create a yearly time series and a state-year panel. Alongside this document you will find two extracts from the ASEC-CPS. These contain all you need for this project, but if you want you can add additional variables/years from the raw data. We show you how to do this below under Obtaining CPS Data. This is optional. Dont expect a better mark just because you add additional variables/years.
All parts of the project carry equal weight.
Submit a word d document and also a do-file before the deadline,
The answers for each of the subpart of the question should be 3 pages per question
The dofile should be written in such a way that anyone with access to the raw data files can replicate the analysis.
Stata outputs (tables/figures) have to be included in the document. It is not enough to refer to outputs that are only included in the Stata log/dofile. If a result isnt shown in the pdf/word document it doesnt count.
Please also refer to the labs zip and then make use of all the past labs in the folder and make use of all the codes, and please make sure to use the textbook Introductory Econometrics a modern approach Jeffrey Wooldridge for the notes part. Please make sure you can use your version of the Stata and it would work. The most important thing is provide the correct analysis in a word document, thank you. 3 pages per each questions, font size 12, spacing 1.5, and provide a do -file and also answers in the word file
Please see the last do-file which provided all the codes and all you need is to provide the interpretation part for the question so please do them well, thank you!
Requirements: word document
TimeSeriesQuestionsForthispartyouhavetoaggregatetheASEC-CPSdatatoayearlytimeseries.Wewillusethreevariables:ÕchildrenÕ,ÕunemployedÕ,andÕshare_marriedÕ.Togetthenumberofchildrenwewillusethenumberofownchildrenunderage5inthehousehold,butonlyforwomenage15-45.Togettheunemploymentratewewillusetheshareunemployedamongprime-age(age25-54)individualswhoareinthelabourforce.Togetthesharemarriedwewillusethesharecurrentlymarriedandnotseparatedamongallindividualsage18orolder.Youcanusethedatasetweprovidewherethethreevariableshavebeengeneratedalreadyandwehavealsocollapsedintoayearlytimeseries.Soyouaregoodtogousingpart1_timeseries.dta.Youcanalsopreparethedatasetyourself.SeeÕObtainingCPSDataÕbelowfordetailsonhowwecreatedthisdataset.1.PlotthetimeseriesforÕchildrenÕandÕunemployedÕovertime.Makesureyoulabeltheaxescorrectly.ThenrunasimpleregressionofÕchildrenÕonÕunemployedÕ.Thiscouldapproximatelycapturetherelationshipbetweenfertilityandthebusinesscycle.InterpretyourÞndings.2.Onepotentiallyimportantcontrolvariableintherelationshipbetweenfertilityandthebusinesscycleisthesharemarried.RunaregressionofÕchildrenÕonÕunemployedÕincludingÕshare_marriedÕasacontrolvariable.Compareyourresultsto(1)anddiscusswhytheymightbedierent.3.Theregressionin(2)mightgiveusbiasedandinconsistentcoecientsiftherearetrendsinthevariablesweareusing.InvestigatethisissueandrunaregressionthataddressesthisconcernifyouÞndthatitcouldbeimportant.Discussyourresults.4.Theregressionsin(2)and(3)mightstillgiveusbiasedandinconsistentcoecientsand/orstandarderrors.Itcouldbeduetothepresenceofnonstationarydynamics(e.g.unitroots)andstationarydynamics(e.g.autocorrelation)intheerrorterms.InvestigatethisissueandrunregressionsthataddressthisconcernifyouÞndthatitcouldbeimportant.Discussyourresults.PanelQuestionsForthispartwearecreatingastatepanelfromtheASEC-CPS.Timeisstillinyears.Astateisnowapanelentity.Wewillcollapseoursurveytostate-yearaverages.WewillagainusethevariablesÕchildrenÕasaproxyforfertility.WewillalsouseÕlnincomeÕ(naturallogarithmofmedianhouseholdincomeinthestate)asaproxyforlifetimeincomeinthestate.ForcontrolvariableswehavemadeavailablethenumberofsurveyrespondentsasaproxyforpopulationandtheÕshare_marriedÕandÕshare_womenÕvariablesascontrols.Thedatasetpart2_panel.dtaonLearncontainsallofthisreadyforanalysis.SeeÕObtainingCPSDataÕbelowifyouwanttodothepreparationyourself,forexampletoaddadditionalvariables/years.5.PlotÕchildrenÕagainstÕlnincomeÕfortheyear2022usingascatterplotwhereonedotistheaverageinastatein2022.Trytoaddaregressionlinetohighlightwhattheoverallrelationshiplookslikein2022.Makesurethattheaxesarelabelled.BrießystatewhatyouÞnd.Thenprovidesomedescriptivestatisticsforyoursamplebyreportingthemean,minimumandmaximumofkeyvariables(ÕchildrenÕ,ÕlnincomeÕ).Itwouldbegoodtoincludedescriptivestatisticsforthecontrolvariablesyouusein(6)below.Makesureyouprovideclearindicationsofwhatyouarereporting.Thismeansdonotincludeanyrawvariablenamesinthetable.Instead,useadescriptivelabellikeÕavg.numberofchildrenbelowage5Õ.Hints:Seehelpscatterforhelponhowtoproducescatterplots.Seehelplfitforhelponhowtoplotaregressionline(Þttedvalues).Youcancombinetwographsinonetwoway,seehelptw.Inthisquestionformattingisespeciallyimportantsomakesureyourtables/Þguresareclearlylabelledandselfexplanatory.6.EstimatetherelationshipbetweenfertilityandincomebypooledOLS(poolingallyears)controllingonlyfortheyearofthesurvey.ThenestimateasecondpooledOLSregressionaddingyourchoiceofcontrolvariables.Interpretyourresultsandcomparethemtothesimpleregressionin(5).Hint:somevariablesthatmightbesuitableascontrolsareÕshare_marriedÕ,Õshare_womenÕandpopulationinthestate.YouhaveaproxyforpopulationintheÕpopÕvariable.Itwouldprobablybegoodtoincludethisinlogformifyoudecidetouseit.Itisyourchoicewhichofthoseyouwanttoinclude(youcanalsoplayaroundwithdierentcombinations)andyouarewelcometoincludeadditionalvariablesbypreparingtheextractyourself.7.EstimatetherelationshipbetweenfertilityandincomeusingtheÞxedeectsestimatorandtheÞrstdierencesestimatorwiththesamecontrolsyouchosein(6).Interpretyourresultsandcomparethemtoyourresultsin(6).DiscusswhetherFEorFDmightbemoreappropriatehere.2
ObtainingCPSDataInthissectionweprovidebasicinstructionshowtodownloadthedatasetandmakeitreadyforanalysis.WeareusingtheIPUMSversionoftheCPS,speciÞcallytheASECannualmodule(alwaysconductedinMarch).YoucanÞnddetailsonthisdatasethere:https://cps.ipums.org/cps/.Ifyouwanttodownloadyourownsampleyouhavetocreateanaccount(ÕregisterÕatthetopright).ClickonÕapplyforaccessÕ,thenÞllouttheform.HereÕsmyscreenshot.Ithinkitistotallyokifyoucopymygeneralresearchstatement.Afteryouhaveregisteredyoucanstartselectingyourdataset.Gotohttps://cps.ipums.org/cps/,clickonÕGetDataÕintheorangebox,thenmakeyourchoices.IwouldsuggesttoonlyselecttheASEC-CPSasastart.TodothatclickonÕSelectSamplesÕ,thenuntickÕAllDefaultSamplesÕ,thenselecttheyears,e.g.2020s,2010s,2000sand1990s.HereÕshowmyscreenlooked:3
Thenyouhavetoselectvariables.Ichoseforinstancethenumberofchildrenbelowage5.YoucanÞndthisvariableunderPerson->Core->FamilyInterrelationships:4
Wealsoselectedthefollowingvariables:age,sex,empstat,marst,hhincome,stateÞp.OnceyouareÞnishedwithselectingvariablesandyearsyoucanclickonÕviewcartÕ.Makesureallthevariablesandyearsarethere.ThenclickÕCreateDataExtractÕandputanamefortheextract.Onceitiscompletedyoushouldseesomethinglikethis:YouthenhavetodownloadboththerawdatabyclickingonÕDownload.DATÕaswellastheStatacommandÞlebyright-clickingonÕSTATAÕandselectingÕSavelinkas…Õ(orequivalentinyourbrowser).MakeanoteofwhereyoudownloadedthosetwoÞles.Next,werunthecommandÞletogetthedatasetintoStata://firstchangeyourworkingdirectory(File->Changeworkingdirectory)//tothepathwhereyoudownloadedtheIPUMSdatasetandthecommandfile//adjustthisnametothecommandfileyoudownloadedfromIPUMSdocps_00001.do//thiswillbetherawIPUMSCPSdatasetcompresssavecps,replaceThenallthatremainsisdeÞningourvariablesandcollapsingtoyearaveragesfortheÞrstpartoftheproject://———————————————————————————————-//Createtimeseriesdatasetforfirstpartofproject//———————————————————————————————-usecps,clear//prime-ageindividualsareage25-54gprimeage=age>=25&age=20&empstat=10&empstat=15&age=18&marst=15&age=18&marst<=7//definesharewomenamongallrespondentsgshare_women=sex==2//tocounttherespondentpopulationgpop=1//collapsetoannualstate-levelvariablesusingASECweights.Wecountthesurveyrespondents//togetanestimateforpopulation.Weusethemedianforhouseholdincomebecauseof//outliers.Weuseaveragesfortherest.collapse(sum)pop(p50)hhincome(mean)childrenshare_*[aw=asecwt],by(statefipyear)fast//takelogsglnincome=log(hhincome)glnpop=log(pop)compresssavepart2_panel,replace6
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