Consider the wage equation lnWAGE b1 b2EDUC b3EDUC2 b4EXPER b5EXPER2 b6HRSWK e (a) Suppose you wish to test

Consider the wage equation lnðWAGEÞ ¼ b1 þ b2EDUC þ b3EDUC2 þ b4EXPER þ b5EXPER2

þ b6HRSWK þ e

(a) Suppose you wish to test the hypothesis that a year of education has the same effect on ln (WAGE) as a year of experience. What null and alternative hypotheses would you set up?

(b) What is the restricted model, assuming that the null hypothesis is true?

(c) Given that the sum of squared errors from the restricted model is SSER ¼

254.1726, test the hypothesis in (a). (For SSEU use the relevant value from Table 6.4. The sample size is N ¼ 1,000.)