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EC 420, Spring 2008
David IfeanyiNwanze
A36520022
Problem Set 2  Due February 7
NOTE
:
For questions using Stata, please type your answers into a word processing document
(using MS Word or something similar).
Insert the relevant part of your Stata log file into your
document, and clearly explain how your Stata output answers the question.
1. For the NLSY sample, calculate the average logarithm of wages for two different groups – those
who attended some college (
school
>12) and those who never attended college (
school
<=12).
Hint:
first generate the log wage variable by typing “
gen lwage= log(wage )
” and generate a variable
that’s equal to one if the person went to college and zero otherwise (for example, “
gen college =
(school>12)”
). (2 points)
.
gen lwage= log(wage )
.
gen college =(school>12)
.
sum lwage if college==0
Variable 
Obs
Mean
Std. Dev.
Min
Max
+
lwage 
2992
1.684877
.6517538
4.908532
6.786715
.
sum lwage if college==1
Variable 
Obs
Mean
Std. Dev.
Min
Max
+
lwage 
2008
2.011673
.6765078
4.908532
6.13439
2. Test the hypothesis that the population mean of
lwage
is equal for those who never went to
college and those who did go to college.
Hint: the proper Stata command for testing whether the
mean of
var1
varies by the value of
var2
is “
ttest var1, by(var2)
” (2 points)
. ttest lwage, by(college)
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 Spring '08
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