Question
To answer this question, we will use R (or your preferred software) and the dataset Mexico.csv that you can download from bCourses. This dataset contains
To answer this question, we will use R (or your preferred software) and the dataset "Mexico.csv" that you can download from bCourses. This dataset contains 1000 randomly selected Mexican workers in the year 2010 (from the Mexican population census in that same year). Write up the answers to a)-d) below in the same document you use for Questions 1 and 3. In addition, please attach the code you have used to answer the questions (R Script). For this, you can copy and paste the code as part of the appendix of your solutions file. a) Open the dataset in R. First, come up a dummy variable "Pension" that indicates whether or not a person is above 55 (considered above "prime working age"). Also generate a dummy variable "Educ" which indicates whether or not a person has more than 6 years of education (above primary school). Visualize and export a table that lists the number of observations, the mean, the standard deviation, the minimum value and the maximum value for each of the variables in the dataset (edit and include the table in your written-up answer). These are administrative data from the government, and the variable "sex" is coded such that 1 corresponds to female and 0 corresponds to male. Briefly describe what is the fraction of people above prime working age in the dataset, what is the fraction of workers with above primary school education in the data, and what is the fraction of workers speaking an indigenous language (an indicator of a person's indigenous descent). b) Use the data and OLS regressions to obtain a point estimate of the natural logarithm of the average weekly hours of work for workers with above primary school education relative to all other workers in Mexico for 2010. Use a second regression to obtain the same point estimates for the natural logarithm of monthly incomes as the outcome variable instead. Export your results in a regression table (that you can edit and include in your written up answer), and comment on the interpretation and statistical significance of your results. c) Use the data and OLS regressions to explore the claim that the observed difference in monthly incomes of workers with above primary school education is only due to the fact that the more educated workers are also more likely to be: i) male, ii) older, iii) work in the services sector, iv) not of indigenous descent (less affected by discrimination), and v) working in states with higher wages. Analyze each of those potential explanations jointly in one specification. Export your analysis appending the same regression table, and comment on the interpretation and statistical significance of your results (Hint: you may need to come up additional dummy variables to answer this question). d) Investigate to what extent the difference in monthly incomes from working in the services sector (relative to other sectors) is significantly different for workers with above or below primary education in Mexico. Export your analysis appending the same regression table, and comment on the interpretation and statistical significance of your results.
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