Econometrics Research Paper.

Your assignment is to write an original econometric research paper, using the IPUMS CPS data, accessible at https://cps.ipums.org/cps/ , to research an economic question of your choice. Your paper should pose a question, develop a hypothesis, and then apply the econometric skills developed in class to analyze the issue empirically. In addition to answering an economic question based on the data, three tests should be included in the analysis:  multicollinearity, heteroskedasticity, and serial correlation (if necessary). Because the CPS samples have a large number of observations over a large number of years, it is likely a good idea to limit your research to a certain geographic area and time period, as well any other data restrictions that are appropriate for your research question.

The CPS data has a large number of variables, allowing for many possible research projects. Here are some examples to get you thinking:

• How has the Affordable Care Act affected health insurance coverage?
• How does education affect the number of children born to a woman?
• How much of the racial income gap can be explained by observable factors such as education and occupation?
• How do transfer payments (welfare, rent subsidies, food stamps, etc.) affect labor force participation?

Here is some additional information on the IPUMS-CPS data, taken from their website. You should spend some time exploring the website to get a feel for what variables are available.

IPUMS-CPS is an integrated set of data spanning more than 50 years (1962-forward) of the Current Population Survey (CPS). The CPS is a monthly U.S. household survey conducted jointly by the U.S. Census Bureau and the Bureau of Labor Statistics. Initiated in the 1940s in the wake of the Great Depression, the survey was designed to measure unemployment. A battery of labor force and demographic questions, known as the “basic monthly survey,” is asked every month. Over time, supplemental inquiries on special topics have been added for particular months. Among these supplemental surveys, the Annual Social and Economic Supplement conducted in March (hereafter referred to as the ASEC) is the most widely used by social scientists and policymakers.

IPUMS is not a collection of compiled statistics; it is composed of microdata. Each record is a person, with all characteristics numerically coded. Because the data are individuals and not tables, researchers must use a statistical package to analyze the millions of records in the database. A data extraction system enables users to select only the samples and variables they require. You will need to register with the IPUMS-CPS website to extract data. IPUMS produces fixed-column ASCII data (a text file).

In addition to the ASCII data file, the system creates a statistical package syntax file to accompany each extract. The syntax file is designed to read in the ASCII data while applying appropriate variable and value labels. SPSS, SAS, and Stata are supported. You must download the syntax file with the extract or you will be unable to read the data. The syntax file requires minor editing to identify the location of the data file on your local computer. A codebook file is also created with each extract. It records the characteristics of your extract and should be downloaded for record-keeping. All data files are created in gzip compressed format. You must uncompress the file to analyze it. Most data compression utilities will handle the files.