Question 1.

Consider a job training program offered to unemployed workers, aimed at improving their
chances of employment. In order to test the effectiveness of the program, the government conducts a
Randomized Control Trial (RCT). For this reason, the program is offered only to workers in a random sample
of eligible cities, but not in the remaining control cities. After the RCT, the government observes the
following data

- 25% of all unemployed workers in eligible cities participated into the program
- 15 every 100 unemployed workers in eligible cities subsequently found a job, while 10 every 100
unemployed workers in control cities found a job during the same period

Based on this information:

A. can you estimate the effect of being offered the program on the probability of finding a job? If yes,
please provide such estimate (by estimate, I mean a “number”); if not, briefly explain why
B. can you estimate the effect of participating to the program on the probability of finding a job for
program participants? If yes, please provide such estimate (by estimate, I mean a “number”); if not,
briefly explain why
C. can you estimate the effect of participating to the program on the probability of finding a job for
individuals who chose not to participate into the program? If yes, please provide such estimate (by
estimate, I mean a “number”); if not, briefly explain why

Question 2. Differently from other psychoactive substances, alcohol is legal in most countries. However,
alcohol abuse can have severe health consequences. In addition, there are concerns that alcohol
consumption may induce a greater propensity to commit crimes.

In the United States, the minimum legal drinking age is 21, though a large fraction of the population starts
drinking before reaching such age. Figure 1 below shows evidence of drinking behavior among young adults
aged 19-23, as measured by the California Health Interview Survey (CHIS). Specifically, the graph shows the
fraction of respondents reporting some drinking behavior, by age (as measured in months around the 21st
birthday).

Figure 1: Fraction of respondents reporting some drinking behavior, by age

.8
Fraction of respondents drinking last month
.4 .5 .6 .7

19 20 21 22 23
age
Figure 2 shows instead number of individuals arrested for violent crime every 100,000 individuals, by age.

Figure 2: arrest rates for violent crime, by age, per 100,000 individuals

146 148 150 152 154 156 158 160 162 164
Arrests per 100,000 individuals

19 20 21 22 23
age

Based on the information provided in Figures 1 and 2 above, please answer the following questions:

• can you provide an estimate of the causal effect of being legally allowed to drink on the probability
of drinking? If yes, please provide such estimate (by “estimate” I mean a number); if not, please
explain why

• can you provide an estimate of the causal effect of being legally allowed to drink on the probability
of being arrested (if you prefer, you can express the probability of arrest in terms of arrest rate per
100,000 individuals)? If yes, please provide such estimate (by “estimate” I mean a number) and
state the condition(s) under which it captures the causal effect of interest; if not, please explain
why

• can you provide an estimate of the causal effect of drinking on the probability of being arrested for
individuals that are about 21 years of age (if you prefer, you can express the probability of arrest in
terms of arrest rate per 100,000 individuals)? If yes, please provide such estimate (by “estimate” I
mean a number) and state the condition(s) under which it captures the causal effect of interest; if
not, please explain why