# Assignment 4 Answers - ECON 425 Key for ASSIGNMENT 4 S.C...

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1 ECON 425 Key for ASSIGNMENT 4 S.C. AHN 1. (1) Dependent Variable: TESTSCR Method: Least Squares Date: 11/17/03 Time: 11:32 Sample: 1 420 Included observations: 420 White Heteroskedasticity-Consistent Standard Errors & Covariance Variable Coefficient Std. Error t-Statistic Prob. STR 64.33886 24.86054 2.587991 0.0100 STR^2 -3.423884 1.249901 -2.739323 0.0064 STR^3 0.059289 0.020763 2.855505 0.0045 HIEL -5.473989 1.033762 -5.295212 0.0000 MEAL_PCT -0.420057 0.028526 -14.72552 0.0000 LOG(AVGINC) 11.74818 1.771438 6.632003 0.0000 C 252.0509 163.6342 1.540331 0.1242 R-squared 0.801086 Mean dependent var 654.1565 Adjusted R-squared 0.798196 S.D. dependent var 19.05335 (2) Wald Test: Equation: HW Test Statistic Value df Probability F-statistic 6.166286 (2, 413) 0.0023 Chi-square 12.33257 2 0.0021 Since the p-val of F is smaller than 5%, reject the null hypothesis. (3) Null Hypothesis: -2*C(2)-84*C(3)-2648*C(4)=0 Null Hypothesis Summary: Normalized Restriction (= 0) Value Std. Err. -2*C(2) - 84*C(3) - 2648*C(4) 1.931861 0.672890 Restrictions are linear in coefficients. 12 3 2 84 2648 Y     . 3 ˆˆ ˆ 2 84 2648 1.93126 Y . 1.93 1.96 0.67 (0.6168,3.2432). 

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2 2. The basic idea is as follows. Employed workers are those who have market wages higher than their reservation wages. Since wages and years of educations are positively related in the whole population, employed workers generally have higher education levels.
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Assignment 4 Answers - ECON 425 Key for ASSIGNMENT 4 S.C...

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