Question

For this assignment, we will replicate the DD study by Gruber & Poterba (1994) [`a la Donald & Lang, 2007]. In their study, they estimate the impact of TRA86 on health insurance take-up of ‘self-employed’ workers. The policy intervention they use is a tax subsidy on health insurance purchase for the self-employed introduced in the Tax Reform Act of 1986. There treatment group are the self-employed workers and their control group are the other workers who are employed. In particular, they look at the aggregate insurance rates of these two groups.

Question 1

We will use the data in Table IV of their paper (which is recreated below in Table 1) to replicate their DD results from Table VI of their paper. In particular they find a DD estimate of 6.7 with a standard error of 0.8. Calculate this using the table below. [Hint: refer to Table VI of their study; they compare years 1985-86 to 1988-89]

Table 1: Aggregate Insurance Rates

Year Self-Employed Employed

1982 68.9 88.6

1983 72.0 88.9

1984 68.9 88.1

1985 68.6 88.0

1986 70.1 88.0

1987 76.1 86.8

1988 73.2 86.1

1989 73.5 84.5

Source: Table IV of GP1994

Question 2:

Would the result be different if we had data for the years 1986 and 1988 only. How different is this from Question 1.

Need help with Q2. Q1 just for reference.

Answer 1

1.

Year	Self-Employed	Employed	Difference
1982	68.9	88.6	19.7
1983	72	88.9	16.9
1984	68.9	88.1	19.2
1985	68.6	88	19.4
1986	70.1	88	17.9
1987	76.1	86.8	10.7
1988	73.2	86.1	12.9
1989	73.5	84.5	11
		87.3750	mean Employed
		71.4125	mean Self-Employed
		15.9625	mean difference (Employed - Self-Employed)
		3.8284	std. dev.
		1.3536	std. error
		8	n
		7	df

2.

Year	Self-Employed	Employed	Difference
1986	70.1	88	17.9
1988	73.2	86.1	12.9
		71.3500	mean Self-Employed1
		86.6500	mean Employed
		-15.3000	mean difference (Self-Employed1 - Employed)
		3.9925	std. dev.
		1.9962	std. error
		2	n
		1	df