Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5. (Stock and Watson, Empirical Exercise E8.2) The data set, CPS2015, is available on Canvas. This data set contains data for fulltime, fullyear workers, ages

image text in transcribedimage text in transcribed
image text in transcribedimage text in transcribed
5. (Stock and Watson, Empirical Exercise E8.2) The data set, CPS2015, is available on Canvas. This data set contains data for fulltime, fullyear workers, ages 2534, with a high school diploma or B.A./B.S. as their highest degree. A detailed description is tiven in CPS2015_Description. In this exercise, you will investigate the relationship between a worker's age and earnings. (Gener ally order workers have more job experience, leading to higher productivity and higher earnings. a) Run a regression of average hourly earnings (AH E) on age (Age), sex (Female), and education (Bachelor). If Age increases from 25 to 26, how are earnings expected to change? If Age increases from 33 to 34, how are earnings expected to change? b) Run a regression of the log of average hourly earnings, log(AH E) on Age, Female, and Bachelor. If Age increases from 25 to 26, how are earnings expected to change? If Age increases from 33 to 34, how are earnings expected to change? 0) Run a regression of the log of average hourly earnings, log(AH E) on log(Age), Female, and Bachelor. If Age increases from 25 to 26, how are earnings expected to change? If Age increases from 33 to 34, how are earnings expected to change? (1) Run a regression of the log of average hourly earnings, log(AH E) on Age, Age2,Female, and Bachelor. If Age increases from 25 to 26, how are earnings expected to change? If Age increases from 33 to 34, how are earnings expected to change? e) Do you prefer the regression in (c) to the regression in (b)? Explain. f) Do you prefer the regression in (d) to the regression in (b)? Explain. g) Do you prefer the regression in (d) to the regression in (c)? Explain. h) Plot the regression relation between Age and log(AH E) from (b), (c), and (d) for males with a high school diploma. Describe the similarities and differences between the estimated regression functions. Would your answer change if you plotted the regression function for females with college degree? i) Run a regression of l'n.(AHE) on Age, Age2,Female, Bachelor, and the interaction term Female X Bachelor. What does the coefficient on the interaction term measure? Alexis is a 30yearold female with a bachelor's degree. What does the regression predict for her value of log(AH E)? Alexis is a 30yearold female with a bachelor's degree. What does the regression predict for her value of log(AH E)? Jane is a 30year-old female with a high school diploma. What does the regression predict for her value of log(AH E)? What is the predicted difference between Alexis's and Jane's earnings? Bob is a 30-year-old male with a bachelor's degree. What does the regression predict for his value of log(AH E)? Jim is a 30-year-old male with a high school diploma. What does the regression predict for his value of log(AH E)? What is the predicted difference between Bob's and Jim's earnings? j) Is the effect of Age on earnings different for men than for women? Specify and estimate a regression that you can use to answer this question. k) Is the effect of Age on earnings different for high school graduates than for college graduates? Specify and estimate a regression that you can use to answer this question. 1) After running all these regressions (and any others that you want to run), summarize the effect of age on earnings for young workers

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Principles Microeconomics

Authors: Tyler Cowen, Alex Tabarrok

4th Edition

1319098762, 978-1319098766

More Books

Students also viewed these Economics questions

Question

discuss the models practical implications for job (re)design.

Answered: 1 week ago

Question

How easy the information is to remember

Answered: 1 week ago

Question

The personal characteristics of the sender

Answered: 1 week ago

Question

The quality of the argumentation

Answered: 1 week ago