Consider the following model Y i = 1 + 2 D i + X i
Question:
Consider the following model
Yi = α1 + α2Di + βXi + ui
where Y = annual salary of a college professor
X = years of teaching experience
D = dummy for gender
Consider three ways of defining the dummy variable.
a. D = 1 for male, 0 for female.
b. D = 1 for female, 2 for male.
c. D = 1 for female, −1 for male.
Interpret the preceding regression model for each dummy assignment. Is one method preferable to another? Justify your answer.
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a Male Professor EY i 1 2 X i Female Professor EY i 1 X i Holdi...View the full answer
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