Refer to the wage data given in Table 9-2 (found on the textbook's Web site). Regression (9.30)
Question:
a. Based on the data of Table 9-2, verify this regression.
b. For this regression, obtain the absolute values of the residuals as well as their squared values and plot each against education. Is there any evidence of heteroscedasticity?
c. Do the Park and Glejser tests on the residuals of this regression. What conclusions can you draw?
d. If heteroscedasticity is found in the double-log model, what kind of WLS transformation would you recommend to eliminate it?
e. For the linear regression (9.3) there was some evidence of heteroscedasticity. If for the log-log model there is no evidence of heteroscedasticity, which model would you choose and why?
f. Can you compare the R2s of the two regressions? Why not?
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