# Tag Info

Accepted

### "Derivative" of an indicator function

As a matter of mathematical trivia, the derivative of an indicator function is zero, except at the threshold where it does not exist. But \begin{align} \mathbb E[\text{I}(i)] &= \mathbb E\big[\...
• 33.9k

### Lack of skilled IT workforce, but they do not raise wages

The factual observations you've listed fit neatly with the law of supply. You've seen that wages (price) have fallen, and during the same period, supply has gone down. The fact that companies ...
• 1,366
Accepted

### What R-squared is a low R-squared?

Disclaimer: this answer comes from a microeconomic research perspective. Time series / macroeconomic specialists will likely have other perspectives. There is no general rule for what's too low ...
• 458
Accepted

### Type - I Error & Type - II Error: Pregnancy test analogy - is it legit?

Presumably here the null hypothesis is $H_0:$ You are not pregnant the alternative hypothesis is $H_1:$ You are pregnant so being pregnant would be the positive result. You take a pregnancy test ...
• 4,765
Accepted

• 366

### Where can I find lorenz curve of countries?

Knoema has visualizations of Lorenz curve for a large number of countries, however note if you are doing some research it is expected you will make your own visualizations based on the data.
• 57.7k

### Lack of skilled IT workforce, but they do not raise wages

Developing a point made in Dan's answer, it is important to distinguish between a movement along a supply curve and a shift of the whole curve, in this case the supply curve for skilled IT personnel. ...
• 8,574

### Robust Standard Errors in Fixed Effects Model (using Stata)

Use -areg- in Stata, and the standard errors will come out as in the textbook. Specifically, the command ...

### Lack of skilled IT workforce, but they do not raise wages

There is a possible hazard to raising wages. It does two things: Draw more workers to your company. Increase the cost of your existing workers. The first should be obvious. If you increase ...
• 1,182
Accepted

### Convergence in probability and convergence in distribution

I will attempt to explain the distinction using the simplest example: the sample mean. Suppose we have an iid sample of random variables $\{X_i\}_{i=1}^n$. Then define the sample mean as $\bar{X}_n$. ...
• 595

### How to average CDFs of one variable across years

Why don't you just take a weighted average? Suppose you have ten years $t \in \{1,...,10\}$ and year $t$ has $N_t$ observations such that in total you have $\sum_t N_t=N$ observations. Let the year-$t$...
• 5,291

### How to find $\phi$, that denotes the correlation of signals among informed traders?

A degenerate joint normal is distribution is one in which you cannot find a PDF for the distribution. They assume you can. (The covariance matrix is invertible). Let $f(s_1,s_2\dots,s_n,v)$ be the ...
• 1,924

### Why do we need at least as many instrumental variables as endogenous regressors to identify parameters in 2SLS?

In standard linear regression model $$y = x^\top \beta + \epsilon$$ with exogeneity $\mathbb E[x\epsilon] = \mathbf 0$ you have $K$ parameters because $\beta$ is $K \times 1$ and you have $K$ ...
• 3,788
Accepted

### Variance of a random variable / Econometrics

$$E[(X-E[X])^2]$$ We FOIL the quadratic, $$E[X^2 -2XE[X]+(E[X])^2]$$ We apply the expectation to each term, $$E[X^2] -2E[XE[X]]+(E[X])^2$$ In the middle piece, $E[X]$ is a constant number that can be ...
• 3,768
Accepted

### Deriving an equation in Banerjee "A Simple Model of Herd Behavior" (1992)

To get the required probability, we just need to sum the probability of all the events with the initial history of the following type. The reason being that after any initial history of this type, it ...
• 9,411

### Partial R2 and contribution of Regressors

I'm a little baffled by your question. I've made a simple simulation, data attached: ...
• 3,477

### What is the average economic value of a human life?

As a graduate in health economics, I'd use the QALY threshold to answer this question. A QALY is a quality adjusted life year i.e., a year in perfect health-related quality of life, two years with 50% ...
• 43
Accepted

### What are some helpful online tools (databases, etc..) for economic analysts?

St. Louis Fed: https://fred.stlouisfed.org/ Has very good US data. I am not aware of a database that systematically aggregates city-level data. I recommend state government sites and, for larger ...
• 2,911
Accepted

### How prevalent is the use of machine learning among economists?

I will attempt to answer the first (How prevalent is it?) and last question (Where can I see their work?). There was a recent post in The Economist about the emergence of machine learning into ...
• 8,611
Accepted

### Do people really care about higher moments?

Perhaps there is some evidence toward your claim, but I would argue that in most situations, people do not use point estimates (although some "smoothing" likely occurs). In particular, there is no ...
• 976