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Exam 2 - Solutions

# Exam 2 - Solutions - PAM 3100 Second Preliminary Exam...

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1 (80 Points) You are interested in estimating the returns to college quality. You have data on college of grad- uation and hourly wages among four-year college graduates. You split the four-year college sector into 3 mutually exclusive and exhaustive groups of “quality”: highly selective, selective, and non- selective. You estimate the following regression: wage = β 0 + β 1 highly selective + β 2 selective + β 3 mathscore + β 4 faminc + β 5 mothed + β 6 fathed + β 7 male + u . The variable definitions are as follows: wage =hourly wage highly selective = 1 if the respondent graduated from a highly selective university and =0 otherwise selective = 1 if the respondent graduated from a selective university and =0 otherwise nonselective = 1 if the respondent graduated from a non-selective university and =0 otherwise mathscore = high school math test score faminc = respondent’s parent’s income mothed = respondent’s mother’s education (in years) fathed = respondent’s father’s education (in years) male = dummy=1 if respondent is male The results from this regression are shown in column (i) of the table below, with the standard errors in parentheses: 2
Independent Variable (i) (ii) highly selective 25.06 2.06 (12.02) (3.00) selective 10.90 0.32 (5.45) (1.01) mathscore 2.32

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Exam 2 - Solutions - PAM 3100 Second Preliminary Exam...

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