Encouraging people to save for retirement is major goal of policy makers. In this question, we ask whether participating
Posted: Thu Apr 28, 2022 12:21 pm
Encouraging people to save for retirement is major goal of
policy makers. In this question, we ask whether participating in a
401(k) plan increases overall net wealth.
There are two basic, main ways of saving for retirement. Through
an employer, using an employer sponsered 401(k) plan, or privately,
using Individual Retirement Account. Since employers often
contribute to a 401(k) plan, this is thought of as an attractive
way to save. Consider the equation:
nettfai=α+δp401ki+ηi(1)(1)nettfai=α+δp401ki+ηi
The coefficient δδ is the casual effect of 4001(k)
participation on nest financial assets.
The data for this question: Get data
(a)
Rewrite this problem in terms of the potential outcomes
framework. Let Y0iY0i and Y1iY1i denote the two
potential outcomes. Explain what each denotes, and define a
treatment effect for this problem.
(b)
Estimate two specifications:
Assume that the CIA assumption holds. State what this assumption
is, and interpret your results?
(c)
Participating in a 401k plan is voluntary, but one can only
participate if one works for an employer who offers one. The fact
that participation is voluntary and job dependent has made some
researchers skeptical that a control strategy, as used above, can
eliminate selection bias. One instrument that has been proposed is
401k eligibility (that is, a dummy for whether or not an employer
offers a 401k.)
What conditions are required for e401k (401
eligibility) to be valid instrumental variable?
(d)
Using the same controls as in part (c), estimate the first-stage
of the two-stage least squares of (1) using e401k as an
instrument. Is the instrument relevant?
(e)
Some policy makers have suggested that the government should
force firms to offer a 401(k) plan. Thus, every working person
would be eligable. While the government can’t force workers to use
the program, what is the expected intent-to-treat effect of
eligibility?
(f)
For individual workers who to take up the 401(k) when eligable,
what is the expected impact on total net financial assets?
policy makers. In this question, we ask whether participating in a
401(k) plan increases overall net wealth.
There are two basic, main ways of saving for retirement. Through
an employer, using an employer sponsered 401(k) plan, or privately,
using Individual Retirement Account. Since employers often
contribute to a 401(k) plan, this is thought of as an attractive
way to save. Consider the equation:
nettfai=α+δp401ki+ηi(1)(1)nettfai=α+δp401ki+ηi
The coefficient δδ is the casual effect of 4001(k)
participation on nest financial assets.
The data for this question: Get data
(a)
Rewrite this problem in terms of the potential outcomes
framework. Let Y0iY0i and Y1iY1i denote the two
potential outcomes. Explain what each denotes, and define a
treatment effect for this problem.
(b)
Estimate two specifications:
Assume that the CIA assumption holds. State what this assumption
is, and interpret your results?
(c)
Participating in a 401k plan is voluntary, but one can only
participate if one works for an employer who offers one. The fact
that participation is voluntary and job dependent has made some
researchers skeptical that a control strategy, as used above, can
eliminate selection bias. One instrument that has been proposed is
401k eligibility (that is, a dummy for whether or not an employer
offers a 401k.)
What conditions are required for e401k (401
eligibility) to be valid instrumental variable?
(d)
Using the same controls as in part (c), estimate the first-stage
of the two-stage least squares of (1) using e401k as an
instrument. Is the instrument relevant?
(e)
Some policy makers have suggested that the government should
force firms to offer a 401(k) plan. Thus, every working person
would be eligable. While the government can’t force workers to use
the program, what is the expected intent-to-treat effect of
eligibility?
(f)
For individual workers who to take up the 401(k) when eligable,
what is the expected impact on total net financial assets?