Question: A single dummy independent variable: Interpreting dummy variables Suppose that information about gender is coded as 1 if the person is female, and 0 otherwise.

A single dummy independent variable: Interpreting dummy variables Suppose that information about gender is coded as "1" if the person is female, and "0" otherwise. Consider the following simple model of hourly wage determination: wage = 0+0female+1educ+u, educ stands for years of schooling. Which of the following pertains to the meaning of 0 ? (Hint: Assume that there is the same amount of education and no omitted variables that are correlated with gender.) Check all that apply. If 0<0 , then given the same level of education for men and women, women earn less than men on average. If 0<0 , then given the same level of education for men and women, women earn more than men on average. 0 reflects the wage difference based on level of education only. 0 determines whether there is wage discrimination against women

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