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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 tstats 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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 Two '13
 strachan

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