USE R CODES TO EXPLAIN ALL QUESTIONS WITH THE INTERPRETATION OF RESULTS

The file SerWorkerPanel rlar contains data collected in 2001 from the transactions of 754 sex workers. There is information on four transactions per worker. The labels D and TRANS are used to describe a particular womon and a particular tansaction. There are three categories of variables. I. Ses worker characteristics: a. AGE, b. an indicator variable ATTRACTIVE equal to l if the worker is attractive, c. and an indicator variable SCHOOL if she has completed secondary school or higher. II. Client characteristics: a. an indicator variable REGULAR equal to one if the client is a regular, b. an indicator variable RICH equal to one if the client is rich and c. an indicator variable ALCOHOL if the client has consumed alcohol before the transaction. III. Transaction characteristics: a. the log of the price of the transaction LNPRICE, b. an indicator variable NOCONDOM equal to one if a condom was not used. and c. two indicator variables for location, B.AR equal to one if the transaction originated in a bar and STREET if the transaction originated in the street. a) Estimate a fixed effects model with LNPRICE as the dependent variable, and as explanatory variables the client characteristics, and the remsining transaction characteristics. b) Why did we omit the sex worker characteristics? c) What coefficient estimates are significantly different from zero at a 5% level of significance? d) NOCONDOM might be a risk premium such that some ses workers are willing to take the risk of having umprotected sex because of the exua price some clients are willing to pay to avoid using a condom. What is your estimate of the risk preminm? Interpret each of the other coefficient estimates. How is the price affected when clients are rich, are regular, and have consumed alcohol? How does the location of the transaction influence the price? e) Estimate the model assuming random effects and with the characteristics of the sex workers added to the model Compare the estimates with those from fixed effects. How have the coefficients of the common variables changed? f) How do the ses worker characteristics affect the price of commercial sex? How much extra does a client have to pay to have unprotected sex with an attactive secondary educated ses worker