5. Difference-in-Differences (25 points) Since 1988, Norway has had a smoking ba

Question

5. Difference-in-Differences (25 points) Since 1988, Norway has had a smoking ban at the work places. However, there was one exemp- tion from this ban: the hospitality industry consisting of bars, pubs, cafes and restaurants. On June 1st 2004, Norway extended this ban on smoking to the hospitality industry. The main objective of the smoking ban was to protect the employees against passive smoking. Bharadwaj, Johnsen and Loken (2014) quantify the effect of the smoking ban on birth outcomes of children of female workers. They use a DiD strategy, using employees in stores as a control group.

Explanation / Answer

From the table, we see that there is no effect of the reform on being born less than 1000 gram ( p =0.67 ) and on being born less than 2500 gram (p = 0.99). We could see a significant effect of the reform on the children born less than 1500 g and 2000 g as their p-values are less than 0.05. We could reject the null hypothesis for both these clusters and conclude based on it.  Also, if we see their standard errors, they are quite low which means that the prediction is good. Hence, the effect on these two clusters is quite big.

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