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Final_Econ140A_2011Spr

# Final_Econ140A_2011Spr - Economics 140A Spring 2011...

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Economics 140A Spring 2011 Professor Startz Final Name: Student number: . Answer all 8 questions. Note that questions are not all worth the same number of points. Be sure to show your work for each question. Please write your answers on the exam in the space provided after each question. Please clearly label the part of the question you are answering. Notice that there is some reference material provided after the questions. And some scrap paper too. You may use a calculator, but no other electronic devices. (No phones or laptops for example.) The exam is closed book. You may be asked to show your student id. The exam is intended to take 2 hours, so you can have 2.5 hours. That’s a serious limit.

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page 2 1. (25 points) Test the hypothesis that age doesn’t have any effect on hours worked. Dependent Variable: HRSWK Method: Least Squares Date: 05/27/11 Time: 16:51 Sample: 1 135963 IF AGE>30 AND AGE<40 Included observations: 25893 Variable Coefficient Std. Error t-Statistic Prob. C 37.20197 22.88610 1.625527 0.1041 ED 1.110788 0.037509 29.61380 0.0000 AGE -1.271542 1.311295 -0.969684 0.3322 AGE^2 0.020444 0.018706 1.092897 0.2744 R-squared 0.033474 Mean dependent var 33.23435 Adjusted R-squared 0.033362 S.D. dependent var 18.04617 S.E. of regression 17.74259 Akaike info criterion 8.589967 Sum squared resid 8149844. Schwarz criterion 8.591228 Log likelihood -111206.0 Hannan-Quinn criter. 8.590375 F-statistic 298.8720 Durbin-Watson stat 2.171346 Prob(F-statistic) 0.000000 Dependent Variable: HRSWK Method: Least Squares Date: 05/27/11 Time: 16:51 Sample: 1 135963 IF AGE>30 AND AGE<40 Included observations: 25893 Variable Coefficient Std. Error t-Statistic Prob. C 17.86174 0.529675 33.72208 0.0000 ED 1.113161 0.037514 29.67312 0.0000 R-squared 0.032889 Mean dependent var 33.23435 Adjusted R-squared 0.032852 S.D. dependent var 18.04617 S.E. of regression 17.74727 Akaike info criterion 8.590418 Sum squared resid 8154773. Schwarz criterion 8.591048 Log likelihood -111213.8 Hannan-Quinn criter. 8.590621 F-statistic 880.4942 Durbin-Watson stat 2.179780 Prob(F-statistic) 0.000000
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page 4 2. (15 points, 5 for each subquestion) Assume that all our usual regression assumptions hold for the data generating process , except that ( ) . Consider the estimator ̃ ( ) ∑ ( ) a. Prove is unbiased. b. Find the variance of . c. Note that if is a valid equation, then is also a valid equation. Thinking about this, prove that ̃ is the BLUE by cleverly citing the Gauss- Markov theorem.
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page 6 3. (25 points) Using the CPS data, I ran a regression of log wages on education, dummy variables for gender and race, as well as certain interactions. (To keep the output short, I eliminated all observations on racial classifications other than white, black, and Asian.) The EViews commands were smpl if white or black or asian ls lnwage c black asian ed fe fe*black fe*asian and the results looked like this: Dependent Variable: LNWAGE Method: Least Squares Date: 05/27/11 Time: 14:52 Sample: 1 135963 IF WHITE OR BLACK OR ASIAN Included observations: 91614 Variable Coefficient Std. Error t-Statistic Prob. C 0.906077 0.015546 58.28512 0.0000 BLACK -0.194142 0.014150 -13.72047 0.0000 ASIAN -0.047692 0.018417 -2.589560 0.0096 ED 0.137306 0.001093 125.6609 0.0000 FE -0.308975 0.006595 -46.84722 0.0000 FE*BLACK 0.147020 0.019127 7.686717 0.0000 FE*ASIAN 0.149335 0.026486 5.638187 0.0000 R-squared 0.163877 Mean dependent var 2.639480 Adjusted R-squared 0.163822 S.D. dependent var 0.993080 S.E. of regression 0.908099 Akaike info criterion 2.645150 Sum squared resid 75543.17 Schwarz criterion 2.645870 Log likelihood -121159.4 Hannan-Quinn criter. 2.645370 F-statistic 2992.444 Durbin-Watson stat 1.785806 Prob(F-statistic) 0.000000
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