Question

In this exercise, you will investigate the relationship between a worker's age and earnings. (Generally, older workers have more job experience, leading to higher productivity and earnings.) The following table contains data for full-time, full-years workers, age 25-34, with a high school diploma or B.A./B.S. as their highest degree. Download the data from the table by clicking the download table icon 0 . A detailed description of the variables used in the data set is available here Use a statistical package of your choice to answer the following questions. Suppose you are interested in estimating the following model + Ahe = Bo + B1 Age + u Run a regression of average hourly earnings (AHE) on age (Age). What is the estimated intercept Bo? The estimated intercept ő, is (Round your response to four decimal places)

Answer 1

For every part in the solution you have already computed values of t-statistic and p-values.

For any test, We reject H₀ at $\alpha$ level of significance if p-value < $\alpha$ .

• For the regression line, Ahe =
  BO
  +
  B1
  Age

To test the significance of the p-value is 0.061.

B1

At 0.05 level of significance p-value > 0.05.

Hence we do not reject H₀.

Can you reject null hypothesis at 5% level of significance ? - NO

• For the regression line for subpopulation with high school graduates (college=0), Ahe =
  BO
  +
  B1
  Age

To test the significance of the p-value is 0.010.

B1

At 0.05 level of significance p-value < 0.05.

Hence we reject H₀.

Can you reject null hypothesis at 5% level of significance ? - YES

• For the regression line for subpopulation with college graduates (college=1), Ahe =
  BO
  +
  B1
  Age

To test the significance of the p-value is 0.900.

B1

At 0.05 level of significance p-value > 0.05.

Hence we do not reject H₀.

Can you reject null hypothesis at 5% level of significance ? - NO

I hope you find the solution helpful. Feel free to ask any doubt in the comment section.

Please do not forget to vote the answer. Thank you in advance!!!