Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Model 1: Y=Wage X=Age, Age squared, Female, the Education variables, Temp, and Training Model 2: Y=ln(Wage) X=Age, Age squared, Female, the Education variables, Temp, and

Model 1: Y=Wage X=Age, Age squared, Female, the Education variables, Temp, and Training Model 2: Y=ln(Wage) X=Age, Age squared, Female, the Education variables, Temp, and Training Model 2 Regression output is given as follow: ^ ln (Wage) = b0 + b1Age - b2Age Squared - b3Female - b4Lowedu - b5Interedu - b6Temp + b7Training ^ ln (Wage) = 1.531800763 + 0.0657640408843982Age - 0.000681070234078206AgeSquared 0.242724910738571Female - 0.521396348970448Lowedu - 0.27099538545346Interedu 0.0752749268228716Temp + 0.10471421709815Training Note that this model 2 is exponential model or log-linear model. Note that Female, Education variables, Temp, and training are all categorical data. Dummy variables. By re-estimating Model 2 with an additional variable interacting term between Temp and Training, we get Model 3. Excel summary output of Model 3 is given as follow: QUESTION 1: State the estimated equation of regression. What does interaction term capture in this case? Is the inclusion statistically justified based on its p-value? (4marks) QUESTION 2: interpret the estimated coefficients for Temp, Training and their interaction. Has there been any change in the significance of Temp or Training when the interaction term is included? (4marks)

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

Probability and Random Processes With Applications to Signal Processing and Communications

Authors: Scott Miller, Donald Childers

2nd edition

123869811, 978-0121726515, 121726517, 978-0130200716, 978-0123869814

More Books

Students also viewed these Mathematics questions

Question

1. What is meant by Latitudes? 2. What is cartography ?

Answered: 1 week ago