Do a linear regression on the wage of the household

Assignment Help Engineering Mathematics

Reference no: EM131246585

Empirical Problem

Use the dataset "psid.txt" to do the following:

1. Look at the variables given and analyze one by one whether they can be used to explain the wages of the household head. If you think you need to create new variables (e.g. interaction dummies), do it.

TIP: Be careful with the direction of causality! Think about it. In this problem you are trying to explain which things affect the wages, not which things are affected by the wages.

E.g.: you get a brain freeze because you ate ice cream too fast. Therefore eating ice cream fast explains the brain freeze. It would be wrong to say that you can explain eating ice cream too fast because of the brain freeze.

2. Do a linear regression on the wage of the household head using the variables you chose previously and analyze the coefficients. Are they significant? Do they point to the direction that you expected?

Description of the Data

Variable	I Description (actual number if not described) I
2005 Family ID number
Month of Interview
Day of Interview
Year of Interview
Length of Interview
Age of Household Head
Sex of Household Head	1 Male, 2 Female
Race of Household Head	1 White, 2 Black
Household Head Marital Status	1 Married, 2 Never Married, 3 Widowed, 4 Divorced, 5 Separated
Whether the Household Head Got a High School Degree	0 no, 1 yes
Whether the Household head Attended College	0 no, 1 yes
Whether the Household Head Got a College Degree	0 no, 1 yes
Wages of the Household Head
Hours of Housework of the Household Head
Whether the Household Head Belongs to a Union	0 no, 1 yes
Amount Given as Child Support by the Household Head
Religious Preference of the Household Head	0 Atheist, 1 Catholic, 2 Jewish, 8 Protestant 10 Other non-Christian, 13 Orthodox
Age of Wife
Race of Wife	1 White, 2 Black
Whether the Wife Cot a High School Degree	0 no, 1 yes
Whether the Wife Attended College	0 no, 1 yes
Whether the Wife Cot a College Degree	0 no, 1 yes
Wages of the Wife
Hours of Housework of the Wife
Amount Given as Child Support by the Wife
Religious Preference of the Wife	0 Atheist, 1 Catholic, 2 Jewish, 8 Protestant 10 Other non-Christian, 13 Orthodox
Number of Children in the Household
Whether the Household Head Owns or Rents the House	1 Owns, 5 Rents, 8 Neither Owns or Rents
Value of the House
Number of Vehicles

Attachment:- psid.txt.zip

Reference no: EM131246585

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