Question: Use the data in HTV to answer this question. The data set includes information on wages, education, parents education, and several other variables for 1,230

Use the data in HTV to answer this question. The data set includes information on wages, education, parents education, and several other variables for 1,230 working men in 1991.

(i) What is the range of the educ variable in the sample? What percentage of men completed twelfth grade but no higher grade? Do the men or their parents have, on average, higher levels of education?

(ii) Estimate the regression model

educ = beta0 + beta1*motheduc + beta2*fatheduc + u

by OLS and report the results in the usual form (type the fitted equation). How much sample variation in

educ is explained by parents' education? Interpret the coefficient on motheduc. Is this coefficient

statistically significant? Explain.

(iii) Construct a 95% confidence interval for the coefficient on fatheduc. Interpret.

(iv) Add the variable abil (a measure of cognitive ability) to the regression from part (ii), and report the results in equation form. Does "ability" help to explain variations in education, even after controlling for parents' education? Explain. Is the coefficient of abil statistically significant? Explain.

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