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| use Data\EG_Index.dta, clear
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| gen hunan=(provcd==11)
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| gen alloff_NoConn=alloff
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| replace alloff_NoConn=alloff_NoConn-estimate*Zeng_all0_invdist if hunan==1
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| sort provcd year
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| collapse (sum) alloff alloff_NoConn labor, by(provcd year)
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| sort year
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| by year: egen tot_labor=sum(labor)
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| gen x=labor/tot_labor
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| gen x2=x^2
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| sort year
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| by year: egen sigmax2=sum(x2)
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| local vars "alloff alloff_NoConn"
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| foreach y of local vars {
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| sort year
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| by year: egen t`y'=sum(`y')
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| gen s`y'=`y'/t`y'
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| gen H`y'=1/t`y'
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| gen sminusx`y'=(s`y'-x)
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| gen sminusx2`y'=(s`y'-x)^2
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| sort year
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| by year: egen G`y'=sum(sminusx2`y')
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| gen gama`y'=(G`y'-(1-sigmax2)*H`y')/((1-sigmax2)*(1-H`y'))
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| }
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| keep if provcd==10
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| keep year gamaalloff gamaalloff_NoConn
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| gen hXconnRole=gamaalloff-gamaalloff_NoConn
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| label var hXconnRole "The role of Hunan*connections"
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| label var gamaalloff "EG Index"
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| label var gamaalloff_NoConn "EG Index excluding the Hunan*connected officials"
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| scatter gamaalloff year, ylabel(0(0.02)0.06) xlabel(1820(30)1910) ms(O) mc(gs4) msize(medium) || scatter gamaalloff_NoConn year, ylabel(0(0.02)0.06) xlabel(1820(30)1910) ms(Oh) mc(blue) msize(medium) mlwidth(medthick) xtitle(Year) ytitle(EG index) title(A. EG index) graphregion(color(white) ifcolor(white) ilcolor(white) fcolor(white)) legend(order(1 "Real" 2 "Counterfactual: Net the effect of Hunan*connections") region(color(none))) saving(Results\ProvEG.gph, replace) xsize(4.5) ysize(4.5)
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| scatter hXconnRole year, legend(on) xlabel(1820(30)1910) ylabel(0(0.01)0.03) ms(Oh) mc(gs1) mlwidth(medthick) msize(medium) xtitle(Year) ytitle(Difference in the two indices) title(B. The role of Hunan*connections) graphregion(color(white) ifcolor(white) ilcolor(white) fcolor(white)) legend(order(1 "The role of Hunan*connections") region(color(none))) saving(Results\Role_hXconn.gph, replace) xsize(4.5) ysize(4.5)
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| graph combine Results\ProvEG.gph Results\Role_hXconn.gph, row(1) xsize(9) ysize(4.5) graphregion(color(white) ifcolor(white) ilcolor(white) fcolor(white))
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| graph export Results\Figure_7.png, replace
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