Exercise 3. Using a sample of 1801 individuals, the following earning equation has been estimated In(earnings)...

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Exercise 3. Using a sample of 1801 individuals, the following earning equation has been estimated In(earnings) = 7.06 + 0.15 educ+ 0.05 experience - 0.21 female (0.04) (0.14) (0.01) (0.01) R² = 0.17, RSS = 100 where the standard errors are reported in brackets. 1. Which variables are significant? Explain 2. Interpret the coefficient estimate on female. 3. Interpret R². 4. Dropping experience and female from the equation gives: In(earnings) = = 6.71 + 0.16 educ (0.18) .01) R² = 0.11, RSS = 140 Are experience and female jointly significant in the original equation at the 5% significance level? Please write: (i) the null and alternative hypothesis, (ii) test statistic, (iii) proper critical value, (iv) conclusion. Hint: F1,1801 = 3.81, F1,1797 = 3.86, F2,1801 = 3.01, F2,1797 = 3.51 Exercise 3. Using a sample of 1801 individuals, the following earning equation has been estimated In(earnings) = 7.06 + 0.15 educ+ 0.05 experience - 0.21 female (0.04) (0.14) (0.01) (0.01) R² = 0.17, RSS = 100 where the standard errors are reported in brackets. 1. Which variables are significant? Explain 2. Interpret the coefficient estimate on female. 3. Interpret R². 4. Dropping experience and female from the equation gives: In(earnings) = = 6.71 + 0.16 educ (0.18) .01) R² = 0.11, RSS = 140 Are experience and female jointly significant in the original equation at the 5% significance level? Please write: (i) the null and alternative hypothesis, (ii) test statistic, (iii) proper critical value, (iv) conclusion. Hint: F1,1801 = 3.81, F1,1797 = 3.86, F2,1801 = 3.01, F2,1797 = 3.51

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The exercise provided presents two estimated earning equations using a sample size of 1801 individuals where the first includes a female and experience variable while the second does not The coefficie... View the full answer