ECON2280_T4_PS.pdf - Econ2280 Introductory Econometrics Tutorial Problem Set 4 Analytical Questions Question 1 The median starting salary for new law

ECON2280_T4_PS.pdf - Econ2280 Introductory Econometrics...

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Econ2280 Introductory Econometrics Tutorial Problem Set 4 Analytical Questions Question 1 The median starting salary for new law school graduates is determined by log ( salary ) = ° 0 + ° 1 LSAT + ° 2 GPA + ° 3 log ( libvol ) + ° 4 log (cos t ) + ° 5 rank + u Where LSAT is the median LSAT score for the graduating class, GPA is the median college GPA for the class, libvol is the number of volumes in the law school library, cost is the annual cost of attending law school, and rank is a law school ranking (with rank=1 being the best). 1. Explain why we expect ° 5 ° 0 : 2. What signs do you expect for the other slope parameters? Justify your answer. 1
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3. Using the data in LAWSCH85, the estimated equation is log ( salary ) = 8 : 34 + 0 : 0047 LSAT + 0 : 248 GPA + 0 : 095 log ( libvol ) +0 : 038 log (cos t ) ± 0 : 0033 rank n = 136 ; R 2 = 0 : 842 What is the predicted ceteris paribus di/erence in salary for school with a median GPA di/erent by one point? (Report your answer as a percentage) 4. Interpret the coe¢ cient on the variable log ( libvol ) : 5. Would you say it is better to attend a higher rank law school? How
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