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Chapter 7 Answers
7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10
1.
Regressor
(1)
(2)
(3)
College (
X
1
)
5.46**
(0.21)
5.48**
(0.21)
5.44**
(0.21)
Female (
X
2
)
2.64**
(0.20)
2.62**
(0.20)
2.62**
(0.20)
Age (
X
3
)
0.29**
(0.04)
0.29**
(0.04)
Ntheast (
X
4
)
0.69*
(0.30)
Midwest (
X
5
)
0.60*
(0.28)
South (
X
6
)
0.27
(0.26)
Intercept
12.69**
(0.14)
4.40**
(1.05)
3.75**
(1.06)
2.
(a)
The
t
statistic is 5.46/0.21
26.0 > 1.96, so the coefficient is statistically significant at the 5%
level. The 95% confidence interval is 5.46
1.96
0.21.
(b)
t
statistic is
2.64/0.20
13.2, and 13.2
1.96, so the coefficient is statistically significant at
the 5% level. The 95% confidence interval is
2.64
1.96
0.20.
3.
(a) Yes, age is an important determinant of earnings. Using a
t
test, the
t
statistic is
0.29
0.04
7.25,
with
a
p
value of 4.2
10
13
, implying that the coefficient on age is statistically significant at the 1%
level. The 95% confidence interval is 0.29
1.96
0.04.
(b)
Age
[0.29
1.96
0.04]
5
[0.29
1.96
0.04]
1.45
1.96
0.20
$1.06 to $1.84
4.
(a) The
F
statistic testing the coefficients on the regional regressors are zero is 6.10. The 1% critical
value (from the
3,
F
distribution) is 3.78. Because 6.10 > 3.78, the regional effects are significant
at the 1% level.
(b) The expected difference between Juanita and Molly is (
X
6,Juanita
X
6,Molly
)
6
6
. Thus a 95%
confidence interval is
0.27
1.96
0.26.
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View Full Document(c) The expected difference between Juanita and Jennifer is (
X
5,Juanita
X
5,Jennifer
)
5
(
X
6,Juanita
X
6,Jennifer
)
6
5
6
. A 95% confidence interval could be contructed using the general methods
discussed in Section 7.3. In this case, an easy way to do this is to omit
Midwest
from the regression
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 Summer '09
 Megerdichian
 Econometrics

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