1.1 Consider the regression results given in Table 1.2.

(a) Suppose you want to test the hypothesis that the true or population regression coeffi cient of the education variable is 1. How would you test this hypothesis? Show the necessary calculations.

(b) Would you reject or not reject the hypothesis that the true union regression coeffi cient is 1?

(c) Can you take the logs of the nominal variables, such as gender, race, and union status? Why or why not?

(d) What other variables are missing from the model?

(e) Would you run separate wage regressions for white and nonwhite workers, male and female workers, and union and non-union workers? And how would you compare them?

(f) Some states have right-to-work laws (i.e. union membership is not mandatory) and some do not have such laws (i.e. mandatory union membership is permitted). Is it worth adding a dummy variable taking the value of 1 if the right-to-work laws are present and 0 otherwise? A priori, what would you expect if this variable is added to the model? (h) Would you add the age of the worker as an explanatory variable to the model? Why or why not?