In: Statistics and Probability
A researcher wishes to examine the relationship between wage
earned and educational level of workers. For...
A researcher wishes to examine the relationship between wage
earned and educational level of workers. For a sample of 4000
workers she has data on hourly earnings (measured in SAR), age of
the worker (in years), worker’s gender, years of experience, number
of years with the present employer, size of the firm in which the
worker is employed, and highest educational qualification (with 4
classifications: no qualification, secondary school certificate,
bachelor degree or PhD)
- Explain how you would set up a model to address the
researcher’s key interest.
- Based on your model, how would you estimate the predicted
impact on wages of holding a PhD compared to having a bachelor’s
degree.
- If the researcher uses ln(wage) as the dependent variable, how
would the estimated coefficients be interpreted?
- What general advice would you give the researcher in relation
to her work – eg. what econometric issues should she be aware of in
conducting this research and interpreting the results?