Consider the following regression results (t ratios are in parentheses): where Y = wifes annual desired hours
Question:
where Y = wife€™s annual desired hours of work, calculated as usual hours of work per year plus weeks looking for work
X2 = after-tax real average hourly earnings of wife
X3 = husband€™s previous year after-tax real annual earnings
X4 = wife€™s age in years
X5 = years of schooling completed by wife
X6 = attitude variable, 1 = if respondent felt that it was all right for a woman to work if she desired and her husband agrees, 0 = otherwise
X7 = attitude variable, 1 = if the respondent€™s husband favored his wife€™s working, 0 = otherwise
X8 = number of children less than 6 years of age
X9 = number of children in age groups 6 to 13
a. Do the signs of the coefficients of the various nondummy regressors make economic sense? Justify your answer.
b. How would you interpret the dummy variables, X6 and X7? Are these dummies statistically significant? Since the sample is quite large, you may use the €œ2-t€ rule of thumb to answer the question.
c. Why do you think that age and education variables are not significant factors in a woman€™s labor force participation decision in this study?
Step by Step Answer:
a As per economic theory the coefficients of X 2 X 5 are expected to be positive and that of X 3 X 8 ...View the full answer
