I. 2018 Current Population Data (6 points) Using the following CPS data, select only the first person from each family. . clear all . use https://bigblue.depaul.edu/jlee141/econdata/cps_data/cepr_march_2018.dta . keep if perno == 1

Using dummy variables, perform a statistical test on the difference of means on total household income (rinch_all). a. By race (wbhao) b. By family type (famtyp)

2) Select only the first person for each family (keep if perno == 1), and estimate the following models. Carefully explain the meaning of the estimated coefficient ,b1 , for each model. Model1: Y i=b 0+b 1 Xi +ei Model2: Y i=b 0+b 1 log Xi +ei Model3: log Y i=b 0+b 1 Xi +ei Model4: log Y i=b 0+b 1 log Xi +ei where Xi = Total household income (rinch_all) Yi = Total child care spending (careval)

3) Find the best suitable model from 2) and estimate a regression model including race dummy variables (wbhao) as independent variables. Carefully explain the difference among the race groups.

4) Perform a restricted F test for the racial differences in the regression model in 3). Setup the hypothesis, perform the test and state your finding.