econ2P91_Lab3_Winter2011 - ECON 2P91: Business Econometrics...

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Unformatted text preview: ECON 2P91: Business Econometrics with Applications Winter 2011 Lab3 The objective of this weeks lab is to demonstrate the use of binary variables in econometrics. As indicated in class, binary variables can be used in the analysis of earnings discrimination cases. Consider the model i i i u AGE AHE + + = 1 where AHE and AGE denote average hourly earnings (in dollars) and age (in years), respectively. As noted in class, econometricians often use age as a proxy for experience owing to the difficulties is obtaining data on experience. This choice of age as the proxy variable presupposes that older workers have greater experience. Is there evidence of gender discrimination in earnings? To answer this question, we will use the Excel data file Earnings.xls . For this data set, FEMALE is a binary (or dummy) variable that takes the value 1 if the person is a female and 0 otherwise (recall that a binary variable only takes 2 possible values, 0 or 1). AHE and AGE are as defined above....
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This note was uploaded on 04/28/2011 for the course ECON 2P91 taught by Professor Ogwang during the Winter '09 term at Brock University.

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