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Homework 8 EC 320 Professor Mastromonaco Winter 2014 Due: Thursday, March 13th Analytical Exercises 1) Suppose you are investigating the determinants...

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Homework 8 EC 320 Professor Mastromonaco Winter 2014 Due: Thursday, March 13th Analytical Exercises 1) Suppose you are investigating the determinants of elementary school quality as measured by test scores, ࠵±² ! . Suppose further that you gather data on 400 classrooms and are in a position to estimate the following model: ࠵±² ! = ! + ! ࠵±² ! + ! ࠵± ! + ! ࠵±²³´ ! + ! ࠵±²³´µ ! + ! ࠵± ! + ! ࠵± ! ࠵±² ! + ! ࠵±² ! ࠵±²³´ ! + ! where SIZE = number of students in class i INC = average income of students’ parents in class i, measured in thousands of dollars. FEMALE = dummy for if the instructor is female. STUDAGE = average student age in class i AGE = age of the instructor a) Interpret, in words, what each parameter means.
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b) Suppose you get the following results Parameter Estimate Standard Error ! 200 40 ! -2 0.25 ! 30 14 ! 75 20 ! 100 48 ! 65 55 ! 15 6.5 ! 30 12.75 What is the impact of the following changes on school test scores? i) Increasing average parental income by $1000 in a class with a female teacher and 35 students. ii) Increasing the classroom size by 10 in a class with a male teacher and average parental income of $150,000 iii) Increasing the age of a female teacher by 5 years. c) Is the effect of size on test scores significantly different for female instructors compared to male instructors? Support your answer. d) If you had access to the data, how would you test the hypothesis that the marginal effect of size on test scores for female instructors is equal to zero?
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