0.8 (DX) (-2.14) Question 3 Consider the following regression output. Y = 3.72 + 2.15 D 1.5 X t= m(6.01) (4.23) (-8.95) R2 = 0.90 Where; Y=Income (Salary of an employee) D=1 for period after 2010, and 0 otherwise t=time in years X = job experience What is the prior expectation about the relationship between income and job experience? (2 marks) (b) Provided that job experience is kept constant, what is the average income for the period after 2010? Is it statistically different from the mean income for the period before 2010? Provide evidence for your claim. (8 marks) Is the slope in the pre- and post-2010 statistically different? Why? (4 marks) (d) What is dummy variable trap? (5 marks) (e) Explain TWO (2) approaches to avoid dummy variable trap? (6 marks) [Total: 25 Marks] 0.8 (DX) (-2.14) Question 3 Consider the following regression output. Y = 3.72 + 2.15 D 1.5 X t= m(6.01) (4.23) (-8.95) R2 = 0.90 Where; Y=Income (Salary of an employee) D=1 for period after 2010, and 0 otherwise t=time in years X = job experience What is the prior expectation about the relationship between income and job experience? (2 marks) (b) Provided that job experience is kept constant, what is the average income for the period after 2010? Is it statistically different from the mean income for the period before 2010? Provide evidence for your claim. (8 marks) Is the slope in the pre- and post-2010 statistically different? Why? (4 marks) (d) What is dummy variable trap? (5 marks) (e) Explain TWO (2) approaches to avoid dummy variable trap? (6 marks) [Total: 25 Marks]