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Run a regression of average hourly earnings

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Please show the copy of your STATA output. Write your answers separately. Show all your work. For this exercise, use STATA. The data set is attached to this question;a) Run a regression of average hourly earnings (AHE) on age (Age), gender (Female), and education (Bachelor). What are the estimated coe?cients for the three explanatory variables? Interpret them one by one.;b) Can you tell from the model that if a bachelor?s degree will a?ect the average hourly;earning di?erently for male and female? (Yes or No question).;c) Create an interaction term between F emale and Bachelor. Run a regression of AHE on Age, Female, Bachelor and the interaction term. Use the estimated STATA output to;answer;? 1. Alexis is a 30-year-old female with a bachelor?s degree. What does the regression predict for her average hourly earning?;? 2. Bob is a 30-year-old male with a bachelor?s degree. What does the regression predict for his value of AHE?;? 3. Test if the di?erence of earnings between Alexis and Bob is statistically signi?cant.;d) Create a new variable Age2 = Age2. Add this new variable in your regression in the previous question. How does the R2 change? Test if Age2 is statistically signi?cant.;e) Create an interaction term between Age and Bachelor, name it interAB. Create an interaction between Age2 and bachelor, name it interA2B. Add these two new variables in your previous regression. Is the coe?cient of Bachelor statistically signi?cant in this;model? Is it statistically signi?cant in your?rst model? Explain the change.;f) Test the joint signi?cance of Bachelor, the interaction term between Age and Bachelor and the interaction between Age2 and Bachelor. Instead of using the formula for F-test;try the following command: test Bachelor interAB interA2B Report the value of the F-statistic and P-value from the STATA output. This command perform the F test for you!;g) Test if the e?ect of Age on AHE depends on Bachelor or not in the previous model. (Hint: notice that in this model there are two interaction terms concerning Age and Bachelor).

 

Paper#22818 | Written in 18-Jul-2015

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