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Unformatted text preview: 1 Problem Set II: Solutions For this problem set you will have to use the data set TWINSAK 2004.MAT which is available on the website for the course. These data were collected and analyzed by Ashenfel- ter and Krueger in a study of twins ( American Economic Review , Vol. 84, No. 5. Dec., 1994, pp. 1157-1173.). The data set has 143 observations on six variables, lwage1 (log weekly wage for first member of twin pair), lwage2 (log weekly wage for second member of twin pair), educ1 (years of education for first member of twin pair), educ2 (years of education for second member of twin pair), age (age of twins), male1 (gender of twins which is identical for both given that all twin pairs are monozygotic in this subsample). 1. Treat both members of the twin pairs as independent observations and estimate a linear regression function for log wages on a constant, years of education, age and age-squared. Report both conventional and robust (Eicker-White) standard errors. Table 1: Estimates and Standard Errors intercept educ age agesq estimate-0.7112 0.0933 0.0772-0.0007 conventional s.e. (0.4228) (0.0150) (0.0193) (0.0002) robust (Eicker-White) s.e. (0.4939) (0.0152) (0.0208) (0.0003) 2. Estimate a linear regression model for the difference in log wages between twins on the2....
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- Fall '07