Question

QUESTION 6 For this question, you should load the R library wooldridge, first. This can be done by : library(wooldridge). Then import "cps91" to answer the question. Question : You would like to estimate the marginal effects of age, education, experience on hourly wage. The variables are labeled as age, educ, exper, and hwage respectively. What would be the regression equation you would estimate? Olwage = Bo +Bleduc +Bzexper+Bzage + u; Ohrwage = Be + Bleduc +Bzexper+B3age + u; Ohrwage = Bo+Bieduc +Bzexper+Bzage log(hrwage) = Bo + educp1 + exper®2 +age B3 tui QUESTION 7 For this question, you should load the library wooldridge, first. This can be done by : library(wooldridge). Then import "cps91" to answer the question. Question : You would like to estimate the marginal effects of age, education, experience on hourly wage. The variables are labeled as age, educ, exper, and hwage respectively. What is correct among the following statements? Based on the estimates, education positively affects hourly wage. Based on the estimates, hourly wage is negatively affected by age and the estimated coefficient is statistically significant with 5% significance level. Based on the estimates, hourly wage is positively affected by experience and the estimated coefficient is statistically significant with 5% significance level. Nothing is statistically significant with 5% significance level.

Answer 1

1) It is given that we need to find the marginal effect of age, education, experience on hourly wage. We don't need to find the semi elasticity and elasticity. This is the simple linear equation. Hence, the correct answer is:

hrwage = B_o + B₁educ + B₂exper + B₃age + u_i

2) To find out whether the variable is significant or not, given information is incomplete. So, with the given information we can only interpret whether the variables are positively related with the dependent variables or negatively related. Hence, the correct answer is based on the estimates, education positively affects hourly wage.