A researcher interviews 50 employees of a large manufacturer and collects data o

Question

A researcher interviews 50 employees of a large manufacturer and collects data on each worker's hourly wage (Wage), years of higher education (EDUC), experience (EXPER), and age (AGE). The data can be found on the text website, labeled Hourly Wage.

a. Estimate: Wage = ?0 + ?1EDUC + ?2EXPER + ?3AGE + .

b. Are the signs as expected? There will be 1.4371 changes in the year of education for a unit change in the hourly wages.

c. Interpret the coefficient of EDUC.

d. Interpret the coefficient of determination.

e. Predict the hourly wage of a 40-year-old employee who has = years of higher education and 8 years of experience.

Explanation / Answer

a. There is no data to estimate the equation.

b. All coefficient estimates are showing positive sign. If one interprets the regression equation one find the coefficient estimates are indeed correct. The higher the level of education, greater will be the opportunity of earning higher profit. The years of experience on job also matter in the determination of wage rate. The greater the years of experience a person have higher will be the wage rate. Similarly, with the age wage rate also increases.

c. Follow comment (b)

d. Without data it is not possible to estimate the coefficient of determination.

e. Follow comment (d).

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