Hw6 - Greg Smith 11/8/2009 Dr. Cuellar Econ 317 Problem Set...

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Greg Smith 11/8/2009 Dr. Cuellar – Econ 317 Problem Set #6 a. Construct a variable to account for a non-linear relationship between wages and experience. Write out your new regression model and explain and interpret the variables. X4 = X1(^2) Wage = β0 + β1X1 + β2X2 + β3X3 + β4X4 + U. b. i. What are the expected signs of the coefficients? Experience = positive Female = negative Female Experience = negative Experience Squared = Negative (diminishing returns) ii. Write out the regression equation for men. Wage = β 0 + β 1 X 1 + β 4 X 4 + U. iii. Write out the regression equation for women. Wage = (β 0 + β 2 ) + (β 1 + β 3 )X 1 + β 4 X 4 + U. c. Using the data set Wage1.dta, estimate the above equation: . reg wage exper female femexp exper2 Source | SS df MS Number of obs = 526 -------------+------------------------------ F( 4, 521) = 34.31 Model | 1492.95648 4 373.239119 Prob > F = 0.0000 Residual | 5667.45781 521 10.878038 R-squared = 0.2085 -------------+------------------------------ Adj R-squared = 0.2024 Total |
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This note was uploaded on 03/08/2011 for the course ECON 304 taught by Professor Eyler during the Spring '07 term at Sonoma.

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Hw6 - Greg Smith 11/8/2009 Dr. Cuellar Econ 317 Problem Set...

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