Estimate a linear regression model with log

Assignment Help Business Economics

Reference no: EM131708202

Applied Economics for Business Assignment

Detailed Instructions: Answer all questions. Feel free to use all course material, textbook, etc. to complete this Assignment.

Introduction - You are given a data set (union.dta) to study the factors which may explain wages in a labour market. The data contains information on 545 individuals, where each individual is observed over 8 consecutive years (1980-1987). The total number of observations is 4,360. The data contains the following variables:

Variable - Description

nr - Unique ID of an individual

year - Year

educ - Number of school years

wage - Income earned (1 unit = $1000)

exper - Work experience (#years)

hours - Hours worked in a year

black - =1 if the individual is black

hisp - =1 if the individual is hispanic

married - =1 if the individual is married

union - =1 if individual has union membership

occ1 - Occupation Cateogry 1

occ2 - Occupation Cateogry 2

occ3 - Occupation Cateogry 3

occ4 - Occupation Cateogry 4

occ5 - Occupation Cateogry 5

occ6 - Occupation Cateogry 6

occ7 - Occupation Cateogry 7

occ8 - Occupation Cateogry 8

occ9 - Occupation Cateogry 9

I. Basic Descriptive Statistics

1. What is the median education level in the data?

2. How many unique black individuals (according to race) are in the data? Note that there are multiple observations per individual in the data.

3. Plot a graph of your choice to distinguish the wage distribution among individuals who have union membership versus who do not. Interpret the graph.

4. Compute the median education and median wage levels seperately for all the nine occupation categories (occ1 to occ9).

5. Compare the average education level of individuals who are non-hispanic, married and working in occupation categories 1, 2, 3 or 4 to individuals who are hispanic, married and working in occupation categories 5, 6, 7, 8 or 9.

II. Linear Regression Analysis

log(wage) = β₀ + β₁ union + β₂ educ + β₃exper + β₄hisp + β₅black + error (1)

1. Estimate a linear regression model with log(wage) as the dependent variable and union, educ, exper, hisp and black as the independent variables (as shown in equation (1)). Interpret and explain the meaning of the coefficients on hisp and exper.

2. Plot a graph of residuals versus work experience (exper) and interpret it.

3. Are the residuals of this regression model normally distributed? Conduct a preliminary test and report your findings. Next, use a formal test to confirm your answer.

4. Compute the elasticity of wages with respect to education at educ=12. Interpret your answer.

5. Predict the average wage for an individual with a union membership (union=1), 15 years of school education (educ=15), 5 years of work experience (exper=5), and whose race is black (black=1 and hisp = 0). Create a 95% confidence interval around the predicted wage.

6. Estimate the regression model in equation (1) after adding a new independent variable: (union x exper). Interpret the estimated coefficient on the new interaction term.

7. Is the relationship between wages and the number of years of work experience, causal? Discuss.

Attachment:- Assignment Files.rar

Reference no: EM131708202

Questions Cloud

Compute prospective costs of debt and the wacc for kashmiri : Kashmiri's Cost of Capital. Kashmiri is the largest and most successful specialty goods company based in Bangalore, India.

Discuss parts of speech analysis tool that are clear to you : Discuss the parts of the speech analysis tool that are clear to you. Discuss the parts that are confusing and what could make them less confusing.

Trident weighted average cost of capital : Trident's Cost of Capital. Market conditions have changed. Maria Gonzalez now estimates the risk-free rate to be 3.60%, the company's credit risk premium.

Prepare a five minute speech based on the preliminary work : Prepare a three to five minute speech based on the preliminary work you have done in class. Write your goal as a single sentence. Follow the Action Steps.

Estimate a linear regression model with log : BEE3062 Applied Economics for Business Assignment. Estimate a linear regression model with log(wage) as the dependent variable and union

Discuss a characteristic of the typical pioneer settlers : Which of the following is not a characteristic of the typical pioneer settlers

What is the weighted average cost of capital : Corcovado Pharmaceuticals. Corcovado Pharmaceutical's cost of debt is 7%. The risk-free rate of interest is 3%. The expected return on the market portfolio.

Discuss an article in an edition of the wall street journal : Select an article appearing in an edition of the Wall Street Journal, New York Times or New York Law Journal.

Discuss what it meant to be english changed : In what ways had American ideas of what it meant to be English changed since 1763

Reviews

len1708202

11/6/2017 1:21:09 AM

Before the end of deadline you must submit printed copies of: 1. A document containing your answers to the questions, including any tables and graphs. 2. A Stata do-file containing the commands you used to obtain the answers. Answer all questions. Feel free to use all course material, textbook, etc. to complete this homework. Submission is via hardcopy i.e. you have to submit a printout of all the answers to the front desk. The submitted document will contain your answers to the questions, including any output, tables and graphs. Also, attach a printout of the do-file containing the commands you used to obtain your answers. You must indicate which question your commands relate to. You may only submit once; it is not possible to alter your documents and re-submit at a later time.

len1708202

11/6/2017 1:21:03 AM

The data corresponding to this homework is uploaded on the ELE page (union.dta). Marking will follow the university's assessment guidelines. Emphasis is placed on the correct interpretation of summary statistics, regression coefficients and hypothesis tests. For graphical analysis, emphasis is placed on the conclusions drawn from a graph, as well as a mention of the limitations, if any. Unless mentioned otherwise, assume a significance level of 5% for all statistical tests. Always state the null hypothesis and alternative hypothesis of the test, as well as your decision at the stated level of significance.

Write a Review

Required(*) Message

Business Economics Questions & Answers

Variability of nominal gdp

What does the Quantity Theory of Money say about the variability of nominal GDP, real GDP and the velocity of money?

Market structure has implications for firm profitability

Market structure has implications for a firm's profitability.

Contractionary discretionary fiscal policies

Describe expansionary/contractionary discretionary fiscal policies. Describe non-discretionary fiscal policies and explain when and why they col increase a budget deficit.

Fiscal policies were implemented during the recession

Analyze the macroeconomic factors that led to the 2007–2009 recession. use researched academic sources to support it. Show these references please. How were GDP, inflation, and unemployment affected during the recession, and how does the model show t..

Considering increasing the full social security retirement

The government is considering increasing the full Social Security retirement age to 75. If this occurs, how do you expect this change would affect how much on-the-job training that workers will want to obtain over their working life?

Concept of elasticity-inelastic in short run and long run

Why is the concept of elasticity important? What does it tell economists? Tell whether you would classify automobile production as either elastic or inelastic in the short run and long run. (Keep in mind that we are talking here about supply elastici..

Way to equalize incomes and wealth

What other economic factors are affected when taxes are raised or lowered, and how are they affected. Should the government increase tax rates on everyone as a way to equalize incomes and wealth.

Aspects would be part of customer enhanced need set

Which of the following aspects would be part of a customer’s enhanced need set? What technique helps customization reduce a company’s all-in costs? The difference between what customers want and what they’re willing to settle for is: Which of the fol..

Statements is example of practical constraint on trade

a tariff placed on imported foreign vehicles will have what effect? which of the following statements is an example of a practical constraint on trade?

Two-part pricing strategy you will use to maximize profit

You have just been hired as manager of a new golf club. The golf club has market power over its members. The club owner wants you to come up with a two-part pricing strategy to maximize profits for the club. The average golfer’s monthly demand is P =..

Do you agree or disagree with monopoly of pareto-efficient

Many argue that breaking up a monopoly is a Pareto-efficient change. This interpretation cannot be so because breaking up a monopoly makes its owners (or shareholders) worse off. Do you agree or disagree.

Examples of government intervention

What are real-world examples of government intervention, taxation, and regulations? What are the goals of each?

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

User Account

All Pages