a. Interpret the effects of the following factors on fertility in a meaningful way.

i. Effect of age

ii. Having electricity

iii. Effect of wifes education

b. For the following questions set up the proper hypothesis tests and interpret the test results. Show all the steps (Hypothesis, test statistics, decision rule, degrees of freedom, interpretation).

(Test at 5 percent significance level The critical values for the t and F tests are approximately 1.96 and 2.6, respectively.)

i. Does having access to electricity have a significant effect?

ii. Is the relationship between Children and age quadratic?

iii. Is the effect of education different between those who live in urban and rural areas?

c. Is MLR.6 (the normality assumption of the error term) a reasonable assumption in this regression? Does that undermine the OLS results? Briefly explain.

d. Suppose we want to run a significance test for the effect of (wifes) education when urban=0.5. Set up the regression that allows us to run this test.

(You do not need to calculate the numerical value of the final test statistics. Also, in this regression you can ignore all the other variables that are irrelevant to this test.)

Problem Two Using data on married women, we obtained the following estimates on fertility decision: Numbers in parentheses are standard errors of the estimates. Note: When you refer to a coefficient of a variable use the variable name as subscript. For example: agesq,urb-educ