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Unformatted text preview: ECON1002: Applied Economics Exercise 2: Wage Equations 1. You will find the data for this question in a file called wage.dta . The data are a sample of 300 male manual workers from the UK. (a) Regress ln wage ( lnwage ) on education ( educ ) and interpret your results. Can you reject the hypothesis that education has no effect? (b) Add years of experience ( exp ) to the regression. What happens to the estimated effect from education? Explain why this happens. (c) Generate a measure of experience squared. Add this to the regression. Does the result suggest returns to experience are constant, increasing or decreasing? (d) Now reestimate your most recent regression equation separately for skilled (those with skill=1 ) and semiskilled (those with skill=0 ) workers. How do your conclusions differ for the two groups? For which group do wages increase fastest in the early years of employment?...
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- Spring '09