To study the relationship between personal characteristics and salary, a data set containing information on salaries and personal characteristics of a sample of employees of a large company has been collected. The file employee data.xls contains the data set. The variables in the data set are:

ID - Individual ID

GENDER - Gender of the individual, takes value 1 if the individual is male, 0 if the individual is female.

AGE - age of the individual

EDUC - Years of Education

JOBCAT - Job category. There are three types of jobs. The variable takes value 1 for clerical jobs, 2 for custodial jobs, and 3 for managerial jobs.

SALARY - Current salary

JOBTIME - Number of months with the company.

PREVEXP - Previous work experience measured in months.

MINORITY - Minority status. Takes value 1 if the individual belongs to a minority group, 0 otherwise.

Instructions:

-Complete the analysis in STATA

-Answer the questions in the space provided.

-Save your STATA output as a PDF file

-Submit the answer sheet and the STATA output using the links provided.

1.Descriptive statistics (2 points)

a.(1 point) What is the number of observations and the number of variables in the data set? WRITE DOWN THESE STATISTICS HERE

b.(1 point) Compute the sample mean, the sample median, the sample standard deviation for current salary (SALARY). WRITE DOWN THESE STATISTICS HERE.

2.Generate new variables (2 points)

a.(1 point) Construct a new variable ED16 that takes value 1 if the individual has 16 years of education or more (EDUC is greater than or equal to 16) and 0 if the individual has fewer than 16 years of education (EDUC is smaller than 16)

b.(1 point) Construct a new variable HIWAGE that takes value 1 if the individual's salary (SALARY) is greater than the average salary for the entire sample.

3.Events and their probabilities (5 points)

a.(1 point) How many individuals have 16 years of education or more? WRITE DOWN THE STATISTICS HERE.

b.(1 point) What is the probability that a randomly selected individual has 16 years of education or more? WRITE DOWN THE STATISTICS HERE.

c.(1 point) What is the proportion of women in the sample? WRITE DOWN THE STATISTICS HERE.

d.(1 point) Conditional on 16 years of education or more, what is the probability that an individual has higher than average salary? (HINT: Use the variable HIWAGE created at point 2) WRITE DOWN THE STATISTICS HERE.

e.(1 point) Are having 16 years of education ore more and having higher than average salary independent events? EXPLAIN. SHOW ALL YOUR CALCULATIONS (NO CREDIT WILL BE GIVEN FOR YES/NO ANSWERS)

4.Comparison of means (5 points)

a.(1 point) Compute the average salary (SALARY) for men and the average salary for women. WRITE DOWN THE RESULT HERE

b.(1 point) Compute the average number of years of education (EDUC) for men and the average number of years of education for women. WRITE DOWN THE RESULT HERE

c.(1 point) Compute the average number of months with the company (JOBTIME) for men and the average number of months with the company for women. WRITE DOWN THE RESULT HERE

d.(1 point) Compute the average number of months of previous experience (PREVEXP) for men and the average number of months of previous experience (PREVEXP) for women. WRITE DOWN THE RESULT HERE

a.(1 point) Summarize your findings at points a-d. Answer the following questions: (1) Are there any gender wage differentials? (2) Could the gender wage differentials be explained, in part, by differences in other personal characteristics? EXPLAIN YOUR ANSWER. (NO CREDIT WILL BE GIVEN FOR YES/NO ANSWERS)

5.Correlation Coefficients (2 points)

a.(1 point) Compute the correlation coefficient for number of years of education (EDUC) and salary (SALARY). WRITE DOWN THE STATISTICS HERE.

b.(1 point) What does the correlation coefficient suggests? (COMMENT ON THE SIGN & STRENGTH, AND EXPLAIN THE IMPLIED RELATIONSHIP BETWEEN THE VARIABLES).

6.Graphical Analysis (4 points)

a.(1 point) Construct a histogram for salary (SALARY). COPY THE GRAPH AND INSERT IT HERE

b.(1 point) Construct the kernel density estimate for salary (SALARY). COPY THE GRAPH AND INSERT IT HERE

c.(1 point) Construct a scatter plot graph of the number of years of education (EDUC) (X-axis) and salary (SALARY) (Y-axis). COPY THE GRAPH AND INSERT IT HERE

d.(1 point) What does the scatter plot graph suggest about the relationship between education and salary? EXPLAIN

Please write the STATA equations next to each question. THank you

ID GENDER YRBRTH EDUC JOBCAT SALARY JOBTIME PREVEXP MINORITY 1952 15 3 57000 98 144 1958 16 40200 98 36 1929 12 21450 98 381 1947 8 21900 98 190 1955 15 45000 98 138 1958 15 32100 98 67 1956 15 36000 98 114 1966 12 21900 98 0 1946 15 27900 98 115 1946 12 24000 98 244 1950 16 30300 98 143 1966 8 28350 98 26 1960 15 27750 98 34 1949 15 35100 98 137 1962 12 27300 97 66 1964 12 40800 97 24 1962 15 46000 97 48 W P 1956 16 103750 97 70 H O O O O O O O O O O P P P O P O P P P P P O P P O O O O P P P O O PI 1962 12 42300 97 103 1940 12 26250 97 48 1963 17 38850 97 17 1940 13 21750 97 315 1965 16 24000 97 75 O O O O O O O O O O O P P P P O O O O O O O P P P 1933 13 16950 97 124 1942 16 21150 97 171 1966 16 31050 96 14 1954 20 60375 96 96 1963 16 32550 96 43 1944 20 135000 96 199 1961 16 31200 96 54 31 1964 13 36150 96 83 1954 20 110625 96 120 33 1961 16 42000 96 68 W P 34 1949 20 92000 96 175 85 1961 18 81250 96 18 36 1963 31350 96 52