Homework_3

# Homework_3 - PAM 305 Introduction to Multivariate Analysis...

This preview shows pages 1–3. Sign up to view the full content.

PAM 305 - Introduction to Multivariate Analysis Fall 2006 Homework 3 Due date: September 29th Question 1 For the computer exercises in STATA we will use the same data set WAGE1.dta. Suppose that the true model is log( wage ) = β o + β 1 educ + β 2 exper + β 3 tenure + u (1) Obtain the sample regression function d log( wage ) = ˆ β o + ˆ β 1 educ + ˆ β 2 exper + ˆ β 3 tenure (2) a. As in the simple linear regression model, the coefficients have a percent- age interpretation. The only difference is that now they have a ceteris paribus interpretation. Interpret ˆ β 1 . b. If we take two people with the same levels of experience and job tenure, what is the percentage difference in predicted wages if their education differs by 1 year? c. What is the estimated effect on wages when an individual stays at the same firm for another year? d. Why we should not be surprised that the simple linear regression d log( wage ) = ˆ β o + ˆ β 1 educ and the multiple regression in (2) produce different estimates of ˆ β 1 1

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
e. Consider estimating by OLS the model
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern