You have obtained a sub-sample of 1744 individuals from the Current Population Survey (CPS) and are interested in the relationship between weekly earnings and age. The regression, using heteroskedasticity-robust standard errors, yielded the following result:

Earn _hat= 239.16 + 5.20Age , R2 = 0.05, SER = 287.21.,

(20.24) (0.57)

where Earn and Age are measured in dollars and years respectively.

(a) Is the relationship between Age and Earn statistically significant? Justify the answer.

(b) The variance of the error term and the variance of the dependent variable are related. Given the distribution of earnings, do you think it is plausible that the distribution of errors is normal? Explain.