Answer Happy

1m_robust(formula = 1n_wage educ + exper+ hrswk + married + metro + midwest + southwest + black + asian, data = CPS, se_type="stata") Standard error type: HC1 Coefficients: (Intercept) educ exper Estimate Std. Error t value Pr (>t) CI Lower CI Upper DF 1.057195 0.124757 8.4741 8.511e-17 0.812377 1.302013 989 0.085612 0.006819 12.5542 1.192e-33 0.072230 0.098994 989 0.005032 0.001370 3.6723 2.533e-04 0.002343 0.007720 989 0.008623 0.001644 5.2469 1.893e-07 0.005398 0.011848 989 0.092659 0.032804 2.8246 4.829e-03 0.028285 0.157033 989 0.174487 hrswk married metro midwest south 0.037888 4.6054 4.654e-06 0.100137 0.248836 989 -0.088859 0.044017 -2.0188 4.378e-02 -0.175236 -0.002483 989 -0.053901 0.045654 -1.1807 2.380e-01 -0.143490 0.035688 989 0.014750 0.046019 0.3205 7.486e-01 -0.075557 0.105057 989 -0.118906 0.051289 -2.3184 2.063e-02 -0.219553 -0.018259 989 -0.054381 0.090051 -0.6039 5.461e-01 -0.231095 0.122333 989 west black asian Adjusted R-squared: 0.2434 Multiple R-squared: 0.251, F-statistic: 29.26 on 10 and 989 DF, p-value: < 2.2e-16 N > reg3 = 1m_robust (1n_wage educ+ exper+ hrswk + married + metro + midwest + west + black + asian, data = CPS, se_type = "stat + south a")
(40 points) You are concerned about omitted variable bias in the regressions of Question 1. For that reason, you decide to regress ln(wage) on all other variables in the dataset and use this model as a benchmark. (a) (11 points) Report a 95% confidence interval for the estimated slope parameter of educ (3 points), explain the relationship between the confidence interval and hypothesis testing (4 points), and test the hypothesis that one year of additional education would increase hourly wage by 12% (4 points). (b) (7 points) Assuming there is no omitted variable bias, discuss the estimated coefficient on female in the benchmark model. In particular, explain what the estimated coefficient on female means on hourly wage (3 points), compare the effect of being female and the effect of one year of additional education (2 points), and discuss if the earning of female workers is significantly different from that of male workers (2 points).