# Consider the data file mroz on working wives and the model (ln (W A G E)=beta_{1}+beta_{2} E

## Question:

Consider the data file mroz on working wives and the model \(\ln (W A G E)=\beta_{1}+\beta_{2} E D U C+\) \(\beta_{3} E X P E R+e\). Use the 428 observations on married women who participate in the labor force.

**a.** Write down in algebraic form the three moment conditions, like (10.13) and (10.14), that would lead to the OLS estimates of the model above.

**b.** Calculate the OLS estimates and residuals, \(\hat{e}_{i}\). What is the sum of the least squares residuals? What is the sum of squared least squares residuals? What is \(\sum E D U C_{i} \times \hat{e}_{i}\) ? What is \(\sum E X P E R_{i} \times \hat{e}_{i}\) ? Relate these results to the moment conditions in (a).

**c.** Calculate the fitted values \(\widehat{\ln (W A G E)}=b_{1}+b_{2} E D U C+b_{3} E X P E R\). What is the sample average of the fitted values? What is the sample average of \(\ln (W A G E), \overline{\ln (W A G E)}\) ?

**d.** Find each of the following:

Compute \(S S R+S S E, R^{2}=S S R / S S T\) and \(R^{2}=1-S S E / S S T\). Explain what these calculations show about measuring goodness-of-fit.

**Data From Equation 10.13 and 10.14:-**

## Step by Step Answer:

**Related Book For**

## Principles Of Econometrics

**ISBN:** 9781118452271

5th Edition

**Authors:** R Carter Hill, William E Griffiths, Guay C Lim