Economics Pro-Seminar (Econ 190)
Problem Set 4
(Due Thursday, 5/2)
You should use the Large-Adults Only Stata dataset from the U.S. Census Bureau’s American
Community Survey (ACS) from my web page.
Problems
1. We are interested in examining business ownership among young workers. What is the business
ownership rate of young adults (ages less than or equal to 30)? To select a subsample in Stata for
calculating means, you would use STATISTICS, SUMMARIES, SUMMARY STATISTICS,
SUMMARY STATISTICS, then choose the BY/IF/IN tab, then at the IF: EXPRESSION box type
agep <= 30. This will calculate means of all variables for the subsample of young people.
2. Focusing on only employed young workers we want to examine their rate of business ownership.
What is the business ownership rate of young workers? Note: use the procedure above, but now in
the If: EXPRESSION box type agep <= 30 & employed == 1.
3. Using the full sample of adults, estimate a model for the probability of owning a business. Check
that the average of your dependent variable approximates the estimate reported in Table 2.1 of
Fairlie and Robb (2008). Estimate regressions for this new dependent variable using a linear
probability, probit, and logit model. Report the regression output.
4. What is the effect of being one year older on the probability of owning a business from your
linear probability model and logit model? You can use the approximation discussed in class for the
logit model.