Question: Use the data in WAGE1 for this exercise. (i) Use OLS to estimate the equation log1wage2 5 b0 1 b1educ 1 b2exper 1 b3exper2 1

Use the data in WAGE1 for this exercise.

(i) Use OLS to estimate the equation log1wage2 5 b0 1 b1educ 1 b2exper 1 b3exper2 1 u and report the results using the usual format.

(ii) Is exper2 statistically significant at the 1% level?

(iii) Using the approximation

%Dwage < 1001b^

2 1 2b^

3exper2Dexper, find the approximate return to the fifth year of experience. What is the approximate return to the twentieth year of experience?

(iv) At what value of exper does additional experience actually lower predicted log(wage)? How many people have more experience in this sample?

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