Question_2perpage - 1. Consider the following equation,...

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1. Consider the following equation, which shows Ordinary Least Squares estimates of the labour supply of working women aged 25-44. hours i = 19.794 - 0.004Y i + 1.387w i – 0.102w i 2 + 1.281M i - 7.801 K i + 3.210 Own i (5.08) (2.18) (3.12) (2.04) (1.41) (3.82) (1.91) where : hours is the number of hours worked per week of individual i Y is other household income (per week) w is the hourly wage M is a dummy variable indicating whether the woman is married K is a dummy variable indicating whether there are children in the household Own is a dummy variable indicating whether the household is an owner-occupier Numbers in brackets are (absolute) t-ratios The average wage in the sample is £5 per hour, the average level of other household income is £120 per week, and average hours per week worked is 23.2. a) Construct a 95% confidence interval for the effect of having children on hours worked. b) Derive a formula for the elasticity of labour supply with respect to the wage in this model. Does the
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This note was uploaded on 03/03/2010 for the course ECON 1002 taught by Professor Matthewwakefield during the Spring '09 term at UCL.

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