# There has been much interest in whether the presence of 401(k) pension plans, available to many U.S. workers, increases net

## Question:

(i) What fraction of the families in the sample are eligible for participation in a 401 (k) plan?

(ii) Estimate a linear probability model explaining 401(k) eligibility in terms of income, age, and gender. Include income and age in quadratic form, and report the results in the usual form.

(iii) Would you say that 401(k) eligibility is independent of income and age? What about gender? Explain.

(iv) Obtain the fitted values from the linear probability model estimated in part (ii). Are any fitted values negative or greater than one?

(vii) The overall percent correctly predicted is about 64.9%. Do you think this is a complete description of how well the model does, given your answers in part (vi)?

(viii) Add the variable pira as an explanatory variable to the linear probability model. Other things equal, if a family has someone with an individual retirement account, how much higher is the estimated probability that the family is eligible for a 401 (k) plan? Is it statistically different from zero at the 10% level?

## This problem has been solved!

Do you need an answer to a question different from the above? Ask your question!

## Step by Step Answer:

**Related Book For**

## Introductory Econometrics A Modern Approach

**ISBN:** 978-0324660548

4th edition

**Authors:** Jeffrey M. Wooldridge

**View Solution**

Create a free account to access the answer

**Cannot find your solution?**

Post a FREE question now and get an answer within minutes.
* Average response time.