Question

0.024 .00 d5 002 0.009 0.0033(.005) Constant 100 .324) a What is the estimated ctr to eacandeely o setively on education? Explain. (2ps) b. Based on the estimated models (1)nd (2) "d wth.5%-a" hdiol by mother's sth" married worker. (Aps) II. (15pts) You are given the following three estimated models, with all the variables described as in question II: Dependent variable: og(wage) (3) 2) educ 0.118 0.062 0.116 C0.024) (0.006) (0.024) 0.095s C0.029) meduc 0.094* C0.029) married 0.252 0.247* C0.071) (0.068) 0.025 0.026 0.020 (0.011) (0.011) (0.009) tenure meduc. educ -0.006 (0.002) -0.006** (0.002) married.ten -0.008 -0.006 (0.009) (0.009) -0.0002 -0.0003 -0.0003 (0.001) (0.0005) (0.001) tenuresq 4.694* 5.5974.932 (O.325) C0.100) (0.324) Constant observations 857 R2 857 0.161 857 0.152 0.175 Note: a. What is the estimated return to education? Does it depend positively or negatively on mother's education? Explain. (2pts) b. Based on the estimated models (1) and (2) and with a 5% significance level, test the hypothesis that mother's education has a significant impact on workers' wages. (State clearly your mall and alternative ypotheses, the statistics to be used, and your conclusion) (2 pts). c. Provide a possible rationale for the presence of the variable tewure in the model estimated above (Ipt) d. Holding everything else constant, what is the estimated effect of an additional tenure year on the wage of: i) a married worker? ii) a non-married worker? (2pts) e. At what number of tenure years does an additional tenure year actually lower the predicted log( wage) for i) a married worker? ii) a non-married worker? (2 pts) f. Calculate the estimated effect of the 20 tenure year on the wage of: i) a married worker, ii) a non- married worker. (2pts). From the estimated equation above, provide an appropriate interpretation for each coefficient associated to the variables married, and married ten. (2pts) h. Based on estimated models ( 1) and (3), and with a 5% significance level, test whether the marital status has a statistically significant impact on the worker's carnings (state clearly your null and alternative hypotheses, the statistics to be used, and your conclusion) (2 pts) Il. (1Spts) You are given the following three estimated models, with all the variables described as in question II Dependent variable: log (wage) educ 0236 0.118 0.062 0.116** C0.024) (0.006) C0.024) meduc 0.095 (0 , 029) 0.094* (0.029) married 0.252*0.247 C0.071) C0.068) tenure 0.025 0.026 0.020** 0.011) (0.011) (0.009) meduc.educ 0.006** C0.002) -0.006 0.002) married.ten 一0.008-0.006 C0.009) C0.009) tenuresa0.000 0.0003 0.003 (0.001) (0.0005) (0.001) Constant 4.694*5.5974,932* 0.325) (0.100) C0.324) observations 857 R2 857 0.152 857 0.161 0.175 Note: a. What is the estimated return to education? Does it depend positively or negatively on mother's education? Explain. (2pts) b. Based on the estimated models (1) and (2) and with a 5% significance level, test the hypothesis that mother's education has a significant impact on workers' wages. (State clearly your null and alternative ypotheses the statistics to be used, and your conclusion) (2 pts). c. Provide a possible rationale for the presence of the variable tenure' in the model estimated above. (Ipt) d. Holding everything else constant, what is the estimated effect of an additional tenure year on the wage of: i) a married worker? ii) a non-married worker? (2pts) e. At what number of tenure years does an additional tenure year actually lower the predicted log(wage) for i) a married worker? ii) a non-married worker? (2 pts) f Calculate the estimated effect of the 20 tenure year on the wage of: i) a married worker; ii) a non- married worker. (2pts). g. From the estimated equation above, provide an appropriate interpretation for each coefficient associated to the variables married, and married.ten. (2pts) h. Based on estimated models ( 1) and (3), and with a 5% significance level, test whether the marital status has a statistically significant impact on the worker's earnings (state clearly your null and alternative hypotheses, the statistics to be used, and your conclusion). (2 pts) Il. (1Spts) You are given the following three estimated models, with all the variables described as in question II Dependent variable: log (wage) educ 0236 0.118 0.062 0.116** C0.024) (0.006) C0.024) meduc 0.095 (0 , 029) 0.094* (0.029) married 0.252*0.247 C0.071) C0.068) tenure 0.025 0.026 0.020** 0.011) (0.011) (0.009) meduc.educ 0.006** C0.002) -0.006 0.002) married.ten 一0.008-0.006 C0.009) C0.009) tenuresa0.000 0.0003 0.003 (0.001) (0.0005) (0.001) Constant 4.694*5.5974,932* 0.325) (0.100) C0.324) observations 857 R2 857 0.152 857 0.161 0.175 Note: a. What is the estimated return to education? Does it depend positively or negatively on mother's education? Explain. (2pts) b. Based on the estimated models (1) and (2) and with a 5% significance level, test the hypothesis that mother's education has a significant impact on workers' wages. (State clearly your null and alternative ypotheses the statistics to be used, and your conclusion) (2 pts). c. Provide a possible rationale for the presence of the variable tenure' in the model estimated above. (Ipt) d. Holding everything else constant, what is the estimated effect of an additional tenure year on the wage of: i) a married worker? ii) a non-married worker? (2pts) e. At what number of tenure years does an additional tenure year actually lower the predicted log(wage) for i) a married worker? ii) a non-married worker? (2 pts) f Calculate the estimated effect of the 20 tenure year on the wage of: i) a married worker; ii) a non- married worker. (2pts). g. From the estimated equation above, provide an appropriate interpretation for each coefficient associated to the variables married, and married.ten. (2pts) h. Based on estimated models ( 1) and (3), and with a 5% significance level, test whether the marital status has a statistically significant impact on the worker's earnings (state clearly your null and alternative hypotheses, the statistics to be used, and your conclusion). (2 pts)

Answer 1

a) estimated returns on education as per 1st model is 0.118

as per 2nd model : 0.062

And as per 3rd model: 0.116

All are positive, hence education has positive effect

Model 1 and 3 are showing negative coefficient of meduc.educ, that means mother's education has negative effect.

B) null hypothesis

H0 : meduc = 0

Alternative hypothesis

H1 : meduc > 0

here t-statistic will be used

For model 1

meduc = 0.095

It is significant at 0.01 level, hence it will be significant at 0.05 level

For model 2

meduc = 0.094

It is also significant at 0.01 level, hence it will be significant at 0.05 level of significance.

Hence, as per both the models, mother's education has positive effect on wages.

C) increase in tenure period would have an impact on the earnings. An idiindivid would have gain a lot of knowledge in an additional year of tenure, which may help him to earn extra income in the subsequent years. Hence, variable tenure is important for the model.

D) coefficient of variable married.ten is negative in both the models but they are not statistically significant. Hence we cannot say anything bout effect of tenure on married worker and non-married worker.