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Consider the following model for wages: wage = 0 + 1 educ + 2 exper + 3 expersq + 4 male + u b.

  1. Consider the following model for wages:

a.      wage = β0 + β1 educ + β2 exper + β3 expersq + β4 male + u 


b.      Write down a model that allows the variance of u to differ between men and women. The variance should not depend on other factors.

c.      Use the data Wage 2017 on Moodle to estimate the parameters of the model for heteroskedasticity. (you have to estimate the wage equation by OLS, first, to obtain the OLS residuals.) Is the estimated variance of u higher for men or for women.?

d.      Is the variance of u statistically different for men and women?

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