Do liberal arts colleges pay economists more than they pay other professors? To find out, we looked at a sample of 2.929 small-college facility members and built a model of their salaries that included a number of variables, floor of which were:

a. Carefully explain the meaning of the estimated coefficient of M.
b. The equation indicates that African Americans earn $426 more than members of other ethnic groups, holding constant the other variables in the equation Does this coefficient have the sign you expected? Why or why not?
c. Is P a dittany variable? If not, what Is It? Carefully explain the meaning of the coefficient of R. (Hint A professor's salary typically increases each year based on rank.)
d. What's yoyo confusion? Do economists earn more than other professors at liberal arts colleges? Explain.
e. The fact that the equation ends with the notation. indicates that there were more than four independent variables in the equation If you could add a variable to the equation, what would it be? Explain

Transcribed Image Text:

S36,721 817M +426Aj406R +3539Ti(3.6) (259) (456) (24) (458) R2-.77 N 2929 where: Sh alary of the ith college professor M a dummy variable equal to 1 if the ith professor is a A a dummy variable equal to 1 if the ith professor is Rithe years in rank of the ith professor male and 0 otherwise African American and 0 otherwise Ti -a dummy variable equal to if the ith professor teaches economics and 0 otherwise where: Sthe salary of the ith college professor M-a dummy variable equal to 1 if the ith professor is a Aa dummy variable equal to 1 if the ith professor is Rithe years in rank of the ith professor male and 0 otherwise African American and 0 otherwise Ti -a dummy variable equal to if the ith professor teaches economics and 0 otherwise