University of Oregon Professor Caroline Weber

Department of Economics Winter 2015

Due: In Lab Week of January 13

Assignment #1: OLS

Economics 421
Introduction to Econometrics

1. Determinants of Resume Callbacks

This data set was used in the analysis for “Are Emily and George More Employable than
Lakisha and Jamal? A Field Experiment on Labor Market Discrimination” by Bertrand and
Mullainathan published in the American Economic Review in 2004.
For each part of this assignment, paste the code in a word document along with any graphs or
tables you estimate. Add any relevant discussion. Round all answers to two decimal places.

(a) Read Bertrand and Mullainathan (2004). What is the main question asked in this paper?
How do they attempt to answer this question?
(b) Import the data set hw1.dta. Type the command “describe” in Stata. Describe will
list the variable names and their labels. The labels will give you a description of each
variable.
(c) Use the variable race to generate a dummy variable that equals zero if the individual
is white and one if the individual is black. Name this variable black. Use the variable
city to generate a dummy variable that equals zero if the individual lives in Boston and
one if the individual lives in Chicago. Name this variable chicago. Use the variable
sex to generate a dummy variable that equals zero if the individual represented by the
resume is male and one if the individual is female. Name this variable female. Use the
command “tabulate” to generate dummy variables for each education category (given
by the variable education).
(d) Without running a regression, use a t-test to compare the mean of call for blacks and
whites. How likely are whites to receive a callback? How likely are blacks to receive a
callback? How many percentage points more or less likely are blacks to receive a callback
than whites? Is this difference statistically significant? Does this suggest there is labor
market discrimination? Why or why not?
(e) Regress call on black. Compare the coefficient on black to what you found in part 1d.
Why is it the same or different?
(f) Regress call on black, female, chicago, yearsexp, yearsexp squared, email, and the edu-
cation dummy variables (leave out the high-school graduate category). Calculate and
report the mean marginal effect of yearsexp, rather than the two coefficients separately.
Report the coefficients, standard errors, and t-tests. Interpret each coefficient and note
which coefficients are significant at the five percent level.
(g) List and describe the assumptions necessary for the estimates you obtained in part 1f
to be valid. Do you expect that the assumption that black is exogenous holds in this
context? Explain your answer.
(h) Name two other variables in the data set that you expect will have a significant effect on
the number of callbacks an individual receives. Explain why you think they will have a

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significant effect on callbacks. Add these variables to the regression you ran in part 1f.
For each of the variables you added, can you reject the null hypothesis that the variable
you included has no effect on callbacks at the five percent level?