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This question was created from smt4 - S17.pdf https://www.coursehero.com/file/29411435/smt4-S17pdf/

1wage |
Coef.
Std. Err.
t
P&gt;It/
[95% Conf. Interval]
educ |
. 0552406
. 0058354
X . XX
X . XXX
. XXXXXXX
. XXXXXXX
south |
- . 0819054
. 048621
-X . XX
X . XXX
. XXXXXXX
. XXXXXXX
urban |
. 1840049
. 0362901
X . XX
X . XXX
. XXXXXXX
. XXXXXXX
south_urban |
-. 0724757
. 0583629
-X . XX
X . XXX
- . XXXXXXX
. XXXXXXX
_cons |
5. 946937
. 0853035
XX . XX
X . XXX
X . XXXXXXX
X . XXXXXXX
a. Please interpret the coefficient on the interaction between south and urban in terms of the
returns of living in a city. Please test whether is significantly different from zero at the 90%
level .
b. You are unhappy with the regression in &quot;a&quot; since there are non-linear effects of education.
log( wage) = Bo + Bedu + B,south + Byurban+ BAsouth * urban+ Bedu' + Boedu' tu
edu' and edu' are education squared and education raised to the power of 3. The rest of the
variables are as defined in &quot;a&quot;. The results of regressing this model are:
Source |
SS
df
MS
Number of obs =
935
F( 6,
928) =
28.56
Model | 25. 8219949
6 4. 30366581
Prob &gt; F
0 . 0000
Residual | 139. 834288
928
1506835
R-squared
0 . 1559
0 . 1504
Total | 165. 656283
934
. 177362188
Root MSE
. 38818
1wage |
Coef.
Std. Err.
t
P &gt; It|
[95% Conf. Interval]
educ | -. 6084499
. 5193148
-X . XX
X . XXX
-1 . 627618
. 4107176
south |
-. 0826128
. 0486587
-X . XX
X . XXX
-. 1781066
012881
urban |
1833713
0362819
X . XX
X . XXX
. 1121673
2545753
south urban | -. 0742973
. 058378
-X . XX
X . XXX
-. 1888654
. 0402708

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