For many years, Mexico has provided public health insurance to its formal sector workers, but in 2002 it started expanding coverage to the rest of the population. Suppose you want to evaluate the effects of the program (“SeguroPopular”)onadultmortalityusingadifference-in-differenceapproach. Your treatment group will be informal sector workers and your control group (who were unaffected by the expansion) are the formal sector workers. Your before period is 2001 and your after period is 2004. For each of the below items, explain why it is is or is not a problem for your estimate of the program effect.

(a) A ?u epidemic sweeps through the country in 2004.

(b) In response to the program, some formal sector workers switch to the informalsectorbecausetheynolongerneedtoworkintheformalsector to get free healthcare.

(c) Some states are faster than others at signing up informal sector workers.

(d) There is a major recession in 2004, and formal sector workers are better protected from economic shocks.

(e) Between 2001 and 2004 the Mexican government improves water quality in rural areas which have higher proportions of informal workers than urban areas.

(f) Formal sector workers are on average older than informal sector workers.