HW4 - Econ 444 Elementary Econometrics (Winter 2010)...

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HOMEWORK EXERCISE: 4 Due in class on Wednesday, Feb 24. 1. Suppose we want to estimate, log ( Y i ) = β 1 + β 2 log ( X 2 i )+ β 3 log ( X 3 i )+ β 4 log ( X 4 i )+ β 5 log ( X 5 i )+ β 6 log ( X 6 i )+ ± i (1) Imagine hypothetically that in data the following relationship is true log ( X 2 i ) = 1 - 2 log ( X 3 i ) (2) Can you estimate all the parameters of (3) by OLS if this were the case? Explain you answer. 2. Download Wage.xls from Carmen. It gives you data on a cross-section of individuals on the following variables : WAGE i - Hourly Wage Rate of Worker i. EDUCATION i - Years of Schooling. FEMALE i - a dummy variable equal 1 Female and 0 otherwise. a. Estimate the following equation. Print out your estimation results you get from Eviews and submit it with your HW: WAGE i = β 0 + β 1 FEMALE i + β 2 EDUCATION i + ± i (3) b. Interpret the estimated coefficient of FEMALE i , ˆ β 1 . c. What is the predicted wage for a female worker with years of educa-
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HW4 - Econ 444 Elementary Econometrics (Winter 2010)...

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