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Suppose you are interested in examining whether gender and level of education inuences the age at which an individual marries for the first time. Data
Suppose you are interested in examining whether gender and level of education inuences the age at which an individual marries for the first time. Data is collected and a regression is performed with 60 observations. Consider the following regression results: NlARRt = 3.15 + 3 GENt + 2.5 EDUt where MRR is the age of the individual during first marriage (in years}. GEN is a dummy variable which takes the value 1 if male and 0 if female. EDU is the level of education (number of years). P-value of GEN and EDU coefcients are 0.02 and 0.04 respectively. Additional analysis reveals the following test statistics: JB = 0.92, White =4.10 and BG = 7.19 where H3 is the Jarque-Bera test statistic, White is the White's test statistic and BG is the Breusch-Godfrey test statistic where the number of lag is 2. Unless otherwise stated, assume the level of signicance is 5%. (a) State the relationship between the level of education and dependent variable. What is the interpretation of GEN? (4 marks) (b) Perform the autocorrelation test. Clearly state the hypothesis, degree of freedom, test statistic and your conclusion for the test. What does this test indicate? (9 marks) (c) What are implications of the autocorrelation test (in b} for the above regression results? Discuss potential problems and possible solutions, if applicable. (6 marks)
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