Q1 The following equation shows an estimated wage equation for a sample of 45,000 fulltime workers aged 18-45 in England

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Q1 The Following Equation Shows An Estimated Wage Equation For A Sample Of 45 000 Fulltime Workers Aged 18 45 In England 1 (325.14 KiB) Viewed 29 times

Q1 The following equation shows an estimated wage equation for a sample of 45,000 fulltime workers aged 18-45 in England in 2018. Inwi 5.48 + 0.18 White; +0.12Male; +0.72Edu; -0.04 Edu;? +0.33 Age:+êi (1.14) (2.12) (2.26) (3.05) (1.99) (1.56) where wi is the hourly wage of individual i; White; is a dummy variable taking the value 1 if the individual i is white and 0 otherwise; Male; is a dummy variable taking the value 1 if the individual i is male and 0 otherwise; Edu; measures the number of years of schooling completed by the individual i; Ageſ is the age of individual i in years; ê is the residual. In indicates the natural logarithm. i is the individual identifier. Numbers in parentheses are absolute t-ratios. (a) Construct a statistical test of the hypothesis that the coefficient on White; is equal to 0.2. Racial discrimination in the labour market has been widely discussed in literature. Find two articles on this topic and summarize the main findings. Discuss if you find evidence of racial discrimination in the labour market in this regression. as an estimate of the financial (b) List two problems with this empirical model returns to education and propose solutions to these problems. A researcher is interested in investigating in more detail how the returns to education change with age. She selects two subsamples from the same data and estimates the two following regressions:
= Regression (a) Sample: 18-25 years old Inwi = 2.48 + 0.12 Whitei +0.11 Male; +0.44Edu; -0.02 Edu;+ - 0.04 Age: + Êi (1.14) (1.12) (2.01) (2.16) (2.21) (2.13) Regression (b) Sample: 30-40 years old Inwi = 3.45 + 0.23 White; +0.02Male; +0.68Edu; -0.02 Edu;? +1.33 Age; + Êi (1.12) (2.02) (1.34) (2.16) (4.21) (3.34) Numbers in parentheses are absolute t-ratios. (c) Give a plausible economic explanation for each of the following features of these empirical models: (i) The coefficient on Age; is negative in the younger sample (regression (a)). (ii) The coefficient on Male; is not significant for the older sample (regression (b)).