Using the regression results in column (2): (a) Is age an important determinant of earnings? Use an
Question:
(a) Is age an important determinant of earnings? Use an appropriate statistical test and/or confidence interval to explain your answer.
(b) Sally is a 29-year-old female college graduate. Betsy is a 34-year-old female college graduate. Construct a 95% confidence interval for the expected difference between their earnings.
The data set consists of information on 4000 full-time full-year workers. The highest educational achievement for each worker was either a high school diploma or a bachelor's degree. The worker's ages ranged from 25 to 34 years. The data set also contained information on the region of the country where the person lived, marital status, and number of children. For the purposes of these exercises, let
AHE = average hourly earnings (in 1998 dollars)
College = binary variable (1 if college, 0 if high school)
Female = binary variable (1 if female, 0 if male)
Age = age (in years)
Ntheast = binary variable (1 if Region = Northeast, 0 otherwise)
Midwest = binary variable (1 if Region = Midwest, 0 otherwise)
South = binary variable (1 if Region = South, 0 otherwise)
West= binary variable (1 if Region = West, 0 otherwise)
Step by Step Answer:
Introduction to Econometrics
ISBN: 978-0133595420
3rd edition
Authors: James H. Stock, Mark W. Watson