3. Consider the following estimated equation: log(wage)n=(.38)4.95+(.028).087educ+(.017).032pareduc+(.0012).0016educpareduc+(.004).238exper,=722,SST=126.81,SSR=106.55 where wage is monthly earnings in dollars, educ is years of education, pareduc is total amount of both parents' education, and exper is years of work experience. (a) What is the return to another year of education (in decimal form), holding pareduc and exper fixed? (b) In order to interpret the coefficient on the interaction term, it is helpful to choose two specific values for pareduc. Let us consider the values pareduc =24 (if both parents have a high school education) and pareduc =32 (if both parents have a college education), and compare the estimated return to educ. (c) The sample mean of pareduc is 22. What is the average partial effect of educ on wage? (d) Is the sign of the coefficient on the interaction term what you expected? Test the null hypothesis that the return to education does not depend on parents' education against a two-sided alternative at the 10% level. (Hint: Examine the expression of the marginal effect of education on wage to determine which parameter(s) should be tested.) (e) Compute R2 and R2. Do they differ substantially? 3. Consider the following estimated equation: log(wage)n=(.38)4.95+(.028).087educ+(.017).032pareduc+(.0012).0016educpareduc+(.004).238exper,=722,SST=126.81,SSR=106.55 where wage is monthly earnings in dollars, educ is years of education, pareduc is total amount of both parents' education, and exper is years of work experience. (a) What is the return to another year of education (in decimal form), holding pareduc and exper fixed? (b) In order to interpret the coefficient on the interaction term, it is helpful to choose two specific values for pareduc. Let us consider the values pareduc =24 (if both parents have a high school education) and pareduc =32 (if both parents have a college education), and compare the estimated return to educ. (c) The sample mean of pareduc is 22. What is the average partial effect of educ on wage? (d) Is the sign of the coefficient on the interaction term what you expected? Test the null hypothesis that the return to education does not depend on parents' education against a two-sided alternative at the 10% level. (Hint: Examine the expression of the marginal effect of education on wage to determine which parameter(s) should be tested.) (e) Compute R2 and R2. Do they differ substantially