You run the following regression: Wagei Wage; = the wage of individual i. A continuous variable...

 

Transcribed Image Text:

You run the following regression: Wagei Wage; = the wage of individual i. A continuous variable measured in thousands of dollars Educ; = the number of years of education of individual i. A continuous variable measured in years Female; = A dummy variable =1 if the individual reports identifying as female and =0 otherwise Where ● ● ● = Suppose that your estimate of: Bo>O B₁>0 B₂<0 |Bol> |B₂| B3>0 ● Po + B₁ Educ; + P₂Female; + P3 Female; Educ¡ + u¡ a) Sketch these relationships on a graph where wage is on the y axis and education is on the x axis. Clearly state all of the groups, their intercepts, and slopes on your diagram. b) What does including the interaction term of Female;*Educ; allow us to do? Why would we include this term? You run the following regression: Wagei Wage; = the wage of individual i. A continuous variable measured in thousands of dollars Educ; = the number of years of education of individual i. A continuous variable measured in years Female; = A dummy variable =1 if the individual reports identifying as female and =0 otherwise Where ● ● ● = Suppose that your estimate of: Bo>O B₁>0 B₂<0 |Bol> |B₂| B3>0 ● Po + B₁ Educ; + P₂Female; + P3 Female; Educ¡ + u¡ a) Sketch these relationships on a graph where wage is on the y axis and education is on the x axis. Clearly state all of the groups, their intercepts, and slopes on your diagram. b) What does including the interaction term of Female;*Educ; allow us to do? Why would we include this term?

Answer rating: 100% (QA)

step... View the full answer