How much does experience affect wage rates? The data file cps5_small contains 1200 observations on hourly wage
Question:
How much does experience affect wage rates? The data file cps5_small contains 1200 observations on hourly wage rates, experience, and other variables from the March 2013 Current Population Survey (CPS). [Note: The data file cps 5 contains more observations and variables.]
a. Estimate the linear regression \(W A G E=\beta_{1}+\beta_{2} E X P E R+e\) and discuss the results.
b. Test the statistical significance of the estimated relationship at the \(5 \%\) level. Use a one-tail test. What is your alternative hypothesis? What do you conclude?
c. Estimate the linear regression \(W A G E=\beta_{1}+\beta_{2} E X P E R+e\) for individuals living in a metropolitan area, where \(M E T R O=1\). Is there a statistically significant positive relationship between expected wages and experience at the \(1 \%\) level? How much of an effect is there?
d. Estimate the linear regression \(W A G E=\beta_{1}+\beta_{2} E X P E R+e\) for individuals not living in a metropolitan area, where \(M E T R O=0\). Is there a statistically significant positive relationship between expected wages and experience at the \(1 \%\) level? Can we safely say that experience has no effect on wages for individuals living in nonmetropolitan areas? Explain.
Step by Step Answer:
Principles Of Econometrics
ISBN: 9781118452271
5th Edition
Authors: R Carter Hill, William E Griffiths, Guay C Lim