You are given the file "wages2" containing observations on 827 single men and women, on the following variables:

Wage Salary = wage and salary income (measured dollars);

Earnings = total earned income (in dollars per year);

Female, Afrcamer, and Hispanic are dummy variables that are 1 if the observed person is Female, Afrcamer, or Hispanic, and, they are 0 otherwise;

Age is the person's age;

Education is the number or years of schooling.

Question a. Generate an interaction variable equal to female*education. What value does this variable take for women? For men?

Question B. Consider the economic model

Wagesalary=_0+_1 Education_i+_2 Female_i+_3 Female_i*Education_i

In this model, if a woman receives one more year of education, by how much does her wage change? If a man receives one more year of education by how much does his wage change? If education is more valuable for men than for women, then what should be true about the value of B3?

Question C. If a man and a woman have the same level of education, what is the difference in their wages? If B3 >0, then is the gender gap larger for more educated people or for less educated people?

Question D Estimate the regression

Wagesalary=_0+_1 Education_i+_2 Female_i+_3 Female_i*Education_i+_4 Age_i+u_i

Is the interaction parameter significantly different from 0? What other parameters are statistically significant?

Question E In other to test whether gender affects wage income, what null hypothesis do we test? Using an F test, conduct this test. Does gender affect wages or not?

Question F According to these results, is education more valuable for men or for women? What does that imply about the effect of education on the gender gap?