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You have learned that earnings functions are one of the most investigated relationships in economics. These typically relate the logarithm of earnings to a series
You have learned that earnings functions are one of the most investigated relationships in economics. These typically relate the logarithm of earnings to a series of explanatory variables such as education, work experience, gender, race, etc. ~- [al Why do you think that researchers have preferred a loglinear specification over a linear specification? ~- [b} You decide. given your knowledge of age-earning proles. to allow the regression line to differ for the below and above 40 years age category. Accordingly you create a binary variable. m. that takes the value one for age 39 and mm is zero otherwise. Estimating the earnings equation results in the following output (using heteroskedasticiqr-robust standard errors}: ~- \\ . LnEorii= 0.92 3.13 >
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