Exercise 1 -
Show that comparing the outcome of those assigned and those not assigned is equal to the weighted difference between the average effects for compliers and the average effect for defiers.
Exercise 2 -
The Causal Question: what is the wage premium for an individual of staying one additional year with an employer?
Does this question face the Fundamental Problem of Causal Inference?
Assume you have a dataset on two groups of individuals: moovers and stayers. To what extent this will help you identifying the returns to tenure?
Derive the OLS estimator, discuss potential bias in the following two cases: Best individuals are more likely to moove. Individuals are more likely to select better jobs.
Assume you have a variable indicating whether individuals have changed employers because of plant closing.
How this variable can be useful, state formally all assumptions needed to obtain the LATE associated to one additional year of tenure.
Additional References: Topel (1991), Altonji and Williams (2005).