Estimate the marginal effect of another year of education

Reference no: EM13925975

Instructions

Conduct a simple linear regression analysis to examine the relationship between ‘education' (the independent variable) and ‘wage' (the dependent variable). Using the Excel data file, prepare a 2000 word report using the following structure:

- Purpose (2 marks)
- Background (2 marks)
- Method (4 marks)
- Results (4 marks)
- Discussion (5 marks)
- Recommendations (3 marks)

In preparing your report you must address the following questions:

(a) Obtain summary statistics and histograms for the variables WAGE and EDUC. Discuss the data characteristics .

(b) Estimate the linear regression WAGE = β1 + β2EDUC + ε and interpret the slope.

(d) Estimate the quadratic regression WAGE = α1 + α2EDUC2 + ε and interpret the results. Estimate the marginal effect of another year of education on wage for a person with 12 years of education, and for a person with 14 years of education. Compare these values to the estimated marginal effect of education from the linear regression in part (b).

(e) Construct a histogram of ln(WAGE). Compare the shape of this histogram to that for WAGE from part (a). Which appears to be more symmetric and bell-shaped?

(f) Estimate the log-linear regression ln(WAGE) = γ1 + γ2EDUC + ε and interpret the slope. Estimate the marginal effect of another year of education on wage for a person with 12 years of education, and for a person with 14 years of education. Compare these values to the estimated marginal effects of education from the linear regression in part (b) and quadratic in part (d)

Attachment:- data.xlsx

Reference no: EM13925975

Questions Cloud

Explain how these events would be accounted : Explain how these events would be accounted for and disclosed in accordance with the requirements of AASB 110.

How to determine whether to buy or sell futures when hedging : Explain how to determine whether to buy or sell futures when hedging. For each of the following situations, determine whether a long or short hedge is appropriate. Justify your answers.

Algebraic formulation of the linear programming model : A complete algebraic formulation of the linear programming model. This should include a description of the decision variables and an explanation of the objective function and constraints.

Goals and perspectives of psychology paper : There are eight current perspectives in psychology; psychoanalytic, behavioral, humanistic, cognitive, evolutionary, biological, sociocultural, and psychosocially. All eight of these have really fascinated me in one way or another but there are th..

Estimate the marginal effect of another year of education : Construct a histogram of ln(WAGE). Compare the shape of this histogram to that for WAGE from part (a). Which appears to be more symmetric and bell-shaped?

Determine the outcome from hedge if it was closed on august : The forward rate was $0.3881. Determine the outcome from the hedge if it was closed on August 16, when the spot rate was $0.4434.

Every person possesses a gender identity : Every person possesses a gender identity within their self's which nearly everyone match one's anatomic look. A person's gender indentify is either male or female or possibly something in between. This is a significant individual trait that adds..

Disadvantages of market-based indicators : what advantages or disadvantages of market-based indicators for making investment

Chief aim of sampling : The chief aim of sampling is to be able to select a. simple random samples b. a sample whose statistics will accurately portray an unknown population parameter

User Account

All Pages