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In: Statistics and Probability

Using a sample of 1801 black individuals, the following earnings equation has been estimated: ln(earnings )...

Using a sample of 1801 black individuals, the following earnings equation has been estimated:

ln(earnings ) = 7.059 + 0.147educ + 0.049experience-0.201female

                         (.135)        (.008)             (.007)                       (0.036)          R 2 = 0.179; n = 1801

where the standard errors are reported in parenthesis.

  1. Interpret the coefficient estimate on educ
  2. Interpret the coefficient estimate on experience:

In answering parts (c)-(e), you must write down: (i) the null and alternative hypotheses; (ii) the test statistic; (iii) the rejection rule.

  1. Test the hypothesis that educ has no effect on expected earnings. Test this hypothesis against a two sided alternative, using the 5% significance level.
  2. What is overall significance of the regression? Which test do you use? And why?   Test at 5% level
  3. Dropping experience and female from the equation gives:

ln(earnings ) = 6.703 + 0.151educ

                          (.182)      (.012)              R 2 = 0.153; n = 1801

Are experience and female jointly significant in the original equation at the 5% significance level

  1. What does “R-squared=0.153” mean?

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orchestra answered 1 year ago
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