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Unformatted text preview: Chapter 6 Answers 1. By equation (6.15) in the text, we know 2 2 1 1 (1 ). 1 n R R n k =  Thus, that values of 2 R are 0.175, 0.189, and 0.193 for columns (1)–(3). 2. (a) Workers with college degrees earn $5.46/hour more, on average, than workers with only high school degrees. (b)Men earn $2.64/hour more, on average, than women. 3. (a) On average, a worker earns $0.29/hour more for each year he ages. (b)Sally’s earnings prediction is 4 40 5 48 1 2 62 1 0 29 29 15 67 . + . ×  . × + . × = . dollars per hour. Betsy’s earnings prediction is 4 40 5 48 1 2 62 1 0 29 34 17 12 . + . ×  . × + . × = . dollars per hour. The difference is 1.45 4. (a) Workers in the Northeast earn $0.69 more per hour than workers in the West, on average, controlling for other variables in the regression. Workers in the Northeast earn $0.60 more per hour than workers in the West, on average, controlling for other variables in the regression. Workers in the South earn $0.27 less than workers in the West. (b)The regressor West is omitted to avoid perfect multicollinearity. If West is included, then the intercept can be written as a perfect linear function of the four regional regressors. Because of perfect multicollinearity, the OLS estimator cannot be computed.perfect multicollinearity, the OLS estimator cannot be computed....
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This note was uploaded on 05/03/2010 for the course ECON 303 taught by Professor Grant during the Spring '10 term at Lewis and Clark Community College.
 Spring '10
 Grant
 Econometrics

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