Answer to Question #289055 in Quantitative Methods for Aireks

Question

Using a data of 523 workers, we obtained the following regression for model 1

Wage = -3.78 + 0.93 x Edu + 0.11 x Exper -2.41 x Female

(se) (1.2) (0.8) (0.017) (0.39)

R2 0.2492

Adj R2 0.2449

Wage: Hourly wage in $

Educ.: Education in years

Exper.: Experience in years

Female: A binary variable that takes a value of 1 for female and 0 for male

1. Interpret the coefficient of the female dummy variable in the above model. Provide your intuition in favour of your answer.

2. Using a 95% confidence interval, carry out a hypothesis test to determine whether the estimated female coefficient is significantly different from 0 at 5% level.

3. Develop a statistic to test that all the explanatory variable Educ, Exper and Female are jointly significantly different from zero. Explain your answer with suitable evidence.