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322Practice04Fall11

322Practice04Fall11 - Instructor H.H Kim 1 Econometrics...

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Instructor : H.H. Kim Econometrics 1 Practice Questions IV 1) The survey conducted each March is more detailed than in other months and asks questions about earnings during the previous year. The file CPS04 contains the data for 2004 (from the March 2005 survey). These data are for full-time workers, defined as workers employed more than 35 hours per week for at least 48 weeks in the previous year. Data are provided for workers whose highest educational achievement is (1) a high school diploma, and (2) a bachelor’s degree. Series in Data Set: - FEMALE: 1 if female; 0 if male - YEAR: Year - AHE : Average Hourly Earnings - BACHELOR: 1 if worker has a bachelor’s degree; 0 if worker has a high school degree Two regression is done here. First regression (a) is about AHE on Age. And regression (b) is for AHE on Age, Female and Bachelor. Regressor Model a b Age 0.60 (0.04) 0.59 (0.04) Female –3.66 (0.21) Bachelor 8.08 (0.21) Intercept 1.08 (1.17) –0.63 (1.08) SER 9.99 9.07 R 2 0.029 0.200 2 R 0.029 0.199 N 4000 4000 a. Are the results from the regression (b) substantively different from the result in (a) regarding the effects of Age and AHE? Does the regression in (a) seem to suffer from the omitted variable bias? b. Bob is a 26-year old male worker with a high school diploma. Predict Bob’s earnings using the estimated regression in (b). c. Alexis is a 30-year old female worker with a college degree. Predict Alexis’s earnings using the estimated regression in (b). d. Test the null hypothesis that both Female and Bachelor can be deleted from the regression. e. Test the null hypothesis that Female can be deleted from the regression. f. Test the null hypothesis that Bachelor can be deleted from the regression.

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