EMET2007 Lecture 9 for Wattle

Qualitative variables emet20076007 8 st may 2013 24

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Unformatted text preview: dependent wage equations for men and women Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 24 / 53 Estimated wage equation with interaction term Wage equation for men and women Consider the coe¢ cient of -0.227 on female with standard error 0.168 (t t 1.35) Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 25 / 53 Wage equation for men and women Does this mean that there is no signi…cant evidence of lower pay for women at the same levels of educ, exper, and tenure? No: this is only the e¤ect for educ = 0. To answer the question one has to recenter the interaction term, e.g. around educ = 12.5 (= average education). Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 26 / 53 Estimated wage equation with interaction term Consider the coe¢ cient of -0.0056 on female educ With a standard error of 0.031 (t t 0.18) there is no evidence against hypothesis that the return to education is the same for men and women Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 27 / 53 Testing for di¤erences in regression functions across groups cumgpa = College grade point average sat = Standardized aptitude test score hsperc = High school rank percentile tothrs = Total hours spent in college courses female = 1 if the person is a woman (dummy variable) We are interested in the di¤erences for women and men Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 28 / 53 Unrestricted model (contains full set of interactions) Restricted model (same regression for both groups) Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 29 / 53 Unrestricted model (contains full set of interactions) Null hypothesis H0 : δ 0 = δ 1 = δ 2 = δ 3 = 0 This hypothesis states that all interaction e¤ects are zero, i.e. the same regression coe¢ cients apply to men and women Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 30 / 53 Estimation of the unrestricted model The t-stats for each coe¢ cient of interest are tδ0 t 0.85 tδ1 t 1.92 tδ2 t 0.17 tδ3 t 0.07 Tested individually, the hypothesis that the interaction e¤ects are zero cannot be rejected Lecture 9 (qualitative variables) EMET2007/6007 8 st May 2013 31 / 53 Joint te...
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