Consider the following wage model to be estimated: In(wage)= a + Edu+B,Degree + B, Exp+ B,Exp +u where Edu= years of education Degree 1 If you hold a college degree (0 if not) Exp = years of work experience a. We expect the sign of B, to be positive if the b. Why might B, be overstated? Explain. model holds. c. Given the shape of the wage-schooling locus, what else might we include in our wage equation? d. We expect , to be. A recent study estimated the model above via linear regression for a sample of over 500 men: In(wge)=1.2+.10 Edu+.03 Degree+.02 Exp-.005Exp e. What is the rate of return to education? if the signalling model holds. f. What do the estimates say about the value of staying in college? Consider two workers, one with four years of college who forgot to apply for her diploma, and one with four years of college who didn't forget. g. Write an expression for the rate of return to experience.