.  Do liberal arts colleges pay economists more than they pay other professors? To find    

              out we looked at a sample of 2929 small college faculty members and built a model of  

              their salaries that included a number of variables four of which were estimated as given  

              below: (standard errors in parentheses)

S_i = 36,721 + 817M_i + 426A_i + 406R_i + 3539T_i

                                                (259)      (456)      (24)      (458)

     R² = .77       n = 2929

            Where:   S_i = the salary of ith college professor (in dollars)

                        M_i = a dummy variable equal to 1 if the ith professor is a male and 0 otherwise

                         A_i = a dummy variable equal to 1 if the ith professor is African American and 0    

        otherwise

                         R_i = the years in rank of the ith professor

 T_i = a dummy variable equal to 1 if the ith professor teaches economics and 0    

        otherwise

            a. Carefully explain the meaning of the estimated coefficient of M.

            b. The equation indicates that African American earn $426 more than members of other

               ethnic groups, holding constant the other variables in the equation. Does this                   

               coefficient have the sign you expected? Why or why not?

           c. Is R a dummy variable? If not, what is it? Carefully explain the meaning of the  

                 coefficient of R.

           d. What’s your conclusion? Do economists earn more than other professors at liberal art    

                  colleges? Explain. 

           e. Assume that your professor is white, male economist who has been an assistant           

               professor at your college for three years. How much money does the equation predict   

               that he is earning?

Answer rating: 100% (QA)

Answer a If the professor is male then the salary of ... View the full answer