Question: 9. Consider again the data in cps4 small. dat and the wage equation In(WAGE) OOOOEDUCO OEXPER DOEXPER > DO(EXPER * EDUC)De (a) Plot the least

9. Consider again the data in cps4 small. dat and the wage equation In(WAGE) OOOOEDUCO OEXPER DOEXPER > DO(EXPER * EDUC)De (a) Plot the least squares residuals against EDUC and against EXPER. What do they suggest? (b) Test for heteroskedasticity using a Breusch-Pagan test where the variance depends on EDUC, EXPER and MARRIED. What do you conclude at a 5% significance level? (c) Estimate a variance function that includes EDUC, EXPER, and MARRIED and use it to estimate the standard deviation for each observation. (d) Find generalized least squares estimates of the wage equation. Compare the estimates and standard errors with those obtained from least squares estimation with heteroskedasticity-robust standard errors. (e) Find two 95% interval estimates for the marginal effect LE(In(WAGE))/EXPER for a worker with 16 years of education and 20 years of experience. Use least squares with heteroskedasticity-robust standard errors for one interval and the results from part (d) for the other. Comment on any difference

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