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University of British Columbia Felipe Valencia Caicedo

Econ 441 February 2019 Problem Set 2

Instructions You have ten days to work on this problem set. The grading would be check, check minus and check plus. You should hand in your problem set in class, on February 8th. Gabriel would hold on a TA session then instead of class, he will also hold office hours that week, in case you have any questions. Intrinsic Inequality 

Debraj Ray, Development Economics, Chapter 6, Number 3.

Nutrition / Capacity Curve 

Debraj Ray, Development Economics, Chapter 8, Number 6

Returns to Education Based on the paper by Ester Duflo (2001), looking at the impact of a Secondary High School (SHS) building program in Indonesia. The idea was to get an estimate of the returns to schooling. Answer the following questions, based on the following Table:

University of British Columbia Felipe Valencia Caicedo

Econ 441 February 2019

a. Was there an impact of this program on female enrollment? Is it significant? b. What about male enrollment? c. Is there a difference between the impact for females and males? Is this difference significant? What information would you need to determine this? d. Did the program help in secondary high school completion? e. Are there spillovers to other secondary high schools? For whom? f. What was the impact on still being enrolled in high school? What can you speculate about its (negative) sign? Revisiting Kuznets This empirical exercise will guide you through an exploration of the relationship between inequality and income, using the World Income Inequality Database of Thomas Piketty, available at: https://wid.world/es/series/ a. Download the data and plot the relationship between GDP per capital and top 10% income share. Would you conclude from this that there is a Kuznets curve between income and inequality? b. Do the same for top 1% income share. Do your conclusions change? c. Repeat the exercise from part b now using wealth inequality instead. Do the conclusions hold? d. What about using earlier data for income inequality for the top 1%, from say 1950? How does the relationship change?...