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Some economists want to know whether learning computer skills can help unemployed people find a job faster. To answer that question, they conduct a randomized controlled trial. They randomly divide a population of 40 unemployed people into two groups. 20 of them follow a one- week training during which they learn new computer skills, while the remaining 20 do not follow this training. 3 months after the training, 90% of the 10 unemployed that followed the training have found a new job. On the other hand, only 55% of the 10 unemployed that did not follow the training have found a new job by that time. Let Y, be a binary variable equal to 1 if unemployed i has found a job 3 months after the training. Let D; be a binary variable equal to 1 if unemployed i followed the training. The economists run an OLS regression of Y; on a constant and Di. Let , denote the coefficient of D, in that regression. 1) What is the numerical value of , ? (2 points) 2) What is the numerical value of V(B.)? Justify your answer by giving a formula for V(B1). (3 points) 3) Can you reject at the 5% level the null hypothesis that ATT=0? Justify your answer. (1 point) Some economists want to know whether learning computer skills can help unemployed people find a job faster. To answer that question, they conduct a randomized controlled trial. They randomly divide a population of 40 unemployed people into two groups. 20 of them follow a one- week training during which they learn new computer skills, while the remaining 20 do not follow this training. 3 months after the training, 90% of the 10 unemployed that followed the training have found a new job. On the other hand, only 55% of the 10 unemployed that did not follow the training have found a new job by that time. Let Y, be a binary variable equal to 1 if unemployed i has found a job 3 months after the training. Let D; be a binary variable equal to 1 if unemployed i followed the training. The economists run an OLS regression of Y; on a constant and Di. Let , denote the coefficient of D, in that regression. 1) What is the numerical value of , ? (2 points) 2) What is the numerical value of V(B.)? Justify your answer by giving a formula for V(B1). (3 points) 3) Can you reject at the 5% level the null hypothesis that ATT=0? Justify your answer. (1 point)

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