- Question 4 14 Marks The Regression Below Estimates The Relationship Between Wages And Education For Three Population G 1 (76.2 KiB) Viewed 55 times
QUESTION 4 (14 marks) The regression below estimates the relationship between wages and education for three population groups A, B and C using a sample of 10,000 individuals. The variables B and C are dummies for the respective groups, Educ is the education of the individual and B_x_Educ, c_x_Educ are interactions between the groups' dummies and education. Source SS df MS Model Residual 175541.196 334061.881 5 9,994 35108.2392 33.4262438 Number of obs F(5, 9994) Prob > F R-squared Adj R-squared Root MSE 10,000 1050.32 0.0000 0.3445 0.3441 5.7815 Total 509603.077 9,999 50.9654042 Wage Coef. Std. Err. t P>t! [95% Conf. Intervall B C Educ BX Educ CX Educ cons .9152106 2.178193 .5429093 1.233975 -.172097 13.44511 .2987719 .2811399 .0364573 0514603 .0482536 .2142919 3.06 7.75 14.89 23.98 -3.57 62.74 0.002 0.000 0.000 0.000 0.000 0.000 3295575 1.627102 .4714457 1.133102 -.2666838 13.02505 1.500864 2.729284 .6143729 1.334847 -.0775102 13.86517 a) Based on the estimated coefficients, draw a diagram with wages on the vertical axe and education on the horizontal axe showing the estimated linear relationship for each of the groups A, B and C. The graph must indicate the intercepts and slopes of the lines you draw. b) What share of the total variation in wages can be explained by the variation in the explanatory variables? c) Explain the concept of t-statistic for the null hypothesis that the estimated coefficient of variable B is zero. Can we reject the null hypothesis? Use a graph to illustrate your answer.