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Unformatted text preview: 1 V. Extensions of Multiple Regression A. Dummy Variables 1. Definition : A binary variable that indicates a quality, condition, characteristic, etc. exits. 2. Examples: Crosssectional data: Timeseries data: 3. Uses of Dummy Variables a. Shifting the intercept: s Incorporate the dummy variable in your PRE, just as you would any other variable. s There are then two regressions : 2 exp wagehat1 60 50 40 30 20 10 22 20 18 16 14 12 10 f 1 Scatterplot of wagehat1 vs exp Shifting the intercept of the wage model: male vs. female wages. PRS 4: The following multiple regression model was estimated to test for gender bias in management positions: Wagehat = 1511 + 24.164 Exp  113.40 F  7.4336 Exp*F Wage is in $/month, Exp is years of experience and F=1 if female, 0 if male. What is the starting monthly salary for a male manager? Round to the nearest $. PRS 5: The following multiple regression model was estimated to test for gender bias in management positions....
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This note was uploaded on 12/08/2011 for the course ECON 312 taught by Professor Daniellass during the Winter '10 term at UMass (Amherst).
 Winter '10
 DanielLass

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