Assignment 2 consists of creating a log file in STATA. You need to upload it to Brightspace before 5 p.m. on March 21. You received an individualized database that you used for Assignment 1. Use your individualized database and STATA to answer the following questions. The database includes the following variables: hrwage = hourly wage (in dollars), hours = weekly hours worked, age = age of individual in years, educ = number years of schooling, union = indicator which takes the value 1 if the individual is unionized (and 0 otherwise), kidlt6 = indicator which takes the value 1 if there are children under 6 years old in the household (and 0 otherwise). 1. Generate a new variable for potential labor market experience by using the formula "exper = age - educ - 6". In the following, we will call this "experience" variable (or exper). 2. Regress the logarithm of hourly wages (lwage) as a function of experience and level of education. Interpret the results. [1 point] 3. Regress the logarithm of hourly wages on exper, exper2 (experience squared), exper3 (experience cubed) and years of study. Would you prefer this model (with the experience squared and cubed) or the model from question 2. JusDfiez your answer. [1 point] 4. We now wish to study the relationship between union affiliation and the logarithm hourly wages using OLS regression. Interpret your results. Test if union membership has a statistically significant effect at a threshold of Significance of 1%. [2 points] 5. Use the regression results obtained for question 5 to predict the residuals, by creating a new "resid" variable. What are the mean and standard deviation of the variable "resid"? [1 point] [Tip: Type `help predict' in Stata to get help with the Stata command]. 6. We are now interested in a term of interacDon between the union and the experience. Regress the logarithm of the hourly wage on union membership, experience, educaDon and a term of interacDon between the union and experience. What does the coefficient of the interacDon term measure? Test if the effect of experience differs depending on union membership [2 points] 7. A researcher says that unions help people who are less attached to the labor market work to achieve better results in the labor market. In particular the researcher believes that people with young children benefit more from union membership (in terms of logarithm of hourly wage) that people without young children. Explain how you can study this statement with your data and share your findings. Explain your results. [1 point] 8. You want to understand the determinants of union membership. Is it that age, level of education and being a parent (i.e. having young children) together affect union membership? Interpret the coefficient on age. [2 points]