Problem B: A young economist collects data on hourly wages and years of schooling for 10,000 labor force participants (5000 men and 5000 women). AVERAGE VALUES OF VARIABLES IN THE DATA Hourly wage (W) Years of schooling (S) Females $15 15 Males $20 14 She uses these data to estimate separate wage equations for men and women using multiple regression techniques. The form of the wage equations she estimates are: Wm = Bmo + Pms S + & and We= BootBE S + & where the coefficient Bo is the constant term (wages with zero years of schooling) and the coefficient Bs is AW/AX (i.e., "return" to one year of schooling). The estimated coefficients from her study are: Bmo= 16.5, Bro= 7.5, Bms= 0.25, and Be = 0.51t}. 11. 12. 13. Calculate the earnings ratio in the economy under study? (1 point) How much does an additional year of schooling add to the average hourly wage of men and women? (1 point) Plot the hourly wage proles of men and women on the same graph- Label all of the intercepts and slopes. Also note the points that correspond to mean hourly wages and schooling for men and women. (3 point) Use the Oaxaca decomposition to calculate the amount and the share of the earning difference that is \"explained\" by differences in human capital and the share that is 'mexplained." (Do this by adding and subtracting Elm Sf. Make sure to w1ite out the formula.) (3 points) Now add and subtract he Sm instead. How does this change your answer? What is the intuition for why this changes your answer?I (2 points) Provide an explanation for your ndings. 1What is the meaning of the results of the Oaxaca decomposition you performed? (In answering this, try to explain the approach and your key ndings to someone like a journalist.) (3 Points)