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3. In a study of wage distribution researchers estimated the following equation (standard errors
are in parentheses):
wage, =-9.96 +1.45edu; + 0.46 exper; -0.007 exper," -3.06 female; +1.48white + 0.56 female * white
(1.47) (0.075) (0.061)
(0.0014)
(0.418)
(0.594)
(0.015)
n = 5372, R2 = 0.429
where
wage; =Hourly wages in dollars of the i" person
edu; = Years of education of the i" person
experi = years of labor force experience of the i" person
female; = A dummy variable =1 if the i" person is a woman, and 0 otherwise
white; = A dummy variable =1 if the i" person is white , and 0 otherwise
a. What is the increase in the hourly wage of a worker increasing his/her experience in the labor
force by 1 additional year, if the worker is already in the labor force for 12 years?
b. What should be the optimal experience for a worker in the labor force?
c. Interpret the coefficient of the dummy variable white.
d. All else being the same, how much more or less does a white woman make than a non-white
woman, on average?

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Page No.
a )
wage = - 9.96 + 1.45 educi + 0.46emper, - 0.001 empen?
dwage
1.46 - 0.007 x 2x enforce
denperri
where
Dexperi = 1
experi = 12
So A wage = 0146 - 0 007 x 2X 12
D wage = 01292
Therefore...

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