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Suppose you are interested in the relationship between a college major and annual earnings at your early career stage. To investigate this question, you gather
Suppose you are interested in the relationship between a college major and annual earnings at your early career stage. To investigate this question, you gather data on 2020 annual earnings and college majors for UCSC class of 2012 students who studied either economics or other social sciences {e.g.. sociology}. For simplicity, you exclude students who double-majored {i.e.. in this sample, each student is either economics or another social science major, but not both). When you calculate ayerage annual eamings by majors. you nd that economics graduates earned $20,000 on average. whereas non-economics graduates earned $50,000 on average. Answer the following questions. A. Suppose you estimate the following model by 0L5 using the same sample: earnings = 33;; + les-on + u where emwinya measures annual eamings in dollars, and econ is a dummy variable which equals 1 if a person was an economic major and 0 if a person is a non-economics major. - What is the OLE estimate for the intercept? l{Enter the correct number directly. If 30 = 1. enter -1ooo.} - What is the lEirLS estimate for the slope? llIEnter the correct number directly.) B. How you change the base group of the college major dummy and estimate the following model: earnings = on l cthonEcon + 1.: where NmtEema equals 1 if a person was a non-economics major and 0 if an economics major. - What is the OLE estimate for the intercept? l {Enter the correct number directlyJ - What is the OLE estimate for the slope? llIEnter the correct number directlyJ C. Now you drop the intercept and estimate the following model with two dummyr yariables: earnings = weep-n + TgN-Em + E - What is the OLE estimate for 71? ' [Enter the correct number directly] - What is the IDLE estimate for \"T2? ' [Enter the correct number directly] E}. Finally, consider the following model with the intercept and two dummy yariables: comings = (in + 612cm + 52 NonEc-on + .u . Can you estimate the three parameters simultaneously by 0L5? Answer either "YES" or "ND"
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