In: Statistics and Probability
WAGE | YRS | YRSSQ |
4.4567 | 6 | 36 |
5.77 | 7 | 49 |
5.9787 | 8 | 64 |
7.3317 | 9 | 81 |
7.3182 | 10 | 100 |
6.5844 | 11 | 121 |
7.8182 | 12 | 144 |
7.8351 | 13 | 169 |
11.0223 | 14 | 196 |
14.6738 | 15 | 225 |
16.8361 | 16 | 256 |
21.615 | 17 | 289 |
22.531 | 18 | 324 |
Part 1 Use the data found above to do this part. In addition to answering each part, please include a copy of the Excel regression output
a) Estimate the following population equation (just hand in the Excel output for this part)
WAGEi=B1 +B2YRSi
WAGEi =average wage rate for group i YRSi = average years of education for group i
b) (i) Report (and interpret) the computed t-statistic for the slope on the variable YRS
(ii) Report and interpret the R2 statistic.
(iii) With a two-tailed test (and a = 0.05), test the hypothesis that in the population B2=0
(iv) Interpret the estimate for B2
(v) Consider the Ho: In words, what is the null hypothesis saying? B2=0
c) Redo part (a) (another Excel output sheet) for:
WAGEi=B1+B2YRSi2
d) Which functional form [(a) or (c)] do you think fits the data best? Why?