A researcher wonders whether males get paid more, on average, than females at a large firm. She interviews 50 employees and collects data on each employee’s hourly wage (Wage), years of higher education (EDUC), experience (EXPER), age (AGE), and gender. The GENDER dummy variable equals 1 if male, 0 if female. A portion of the data is shown in the accompanying table; the entire data set, labeled Hourly_Wage, can be found on the text website.

a. Estimate: Wage = β₀ + β₁EDUC + β₂EXPER + β₃AGE + β₄GENDER + ε.

b. Predict the hourly wage of a 40-year-old male employee with 10 years of higher education and 5 years experience. Predict the hourly wage of a 40-year-old female employee with the same qualifications.

c. Interpret the estimated coefficient for GENDER. Is the variable GENDER significant at the 5% level? Do the data suggest that gender discrimination exists at this firm?

Transcribed Image Text:

Wage EDUC 37.85 21.72 EXPER AGE 40 39 GENDER 2 24.18