Suppose you estimate a model obtaining, wage=0.620+0.506 x educ + 2.27 x female

Question

Suppose you estimate a model obtaining,

wage=0.620+0.506 x educ + 2.27 x female

were wage is measured in dollars/hours and female is binary variable that is equal to one if the person is a female and zero if the person is a male. The standard errors are 0.67, 0.050 and 0.279, respectively.

(a) Is the "gender gap" significantly different from zero?

(b)What is the predicted wage for a female worker with 10 years of education with 16 years?

(c) How many years of education a male needs to obtain the hourly wage that a female with 16 years earns?

Explanation / Answer

a) t = 2.27/0.279 = 8.13

yes "gender gap" significantly different from zero

b)predicted wage for a female worker with 10 years of education with 16 years = 0.620+0.506*10+2.27*1 = $7.95/hr

c) hourly wage that a female with 16 years earns = 0.620+0.506*15+2.27*1 = 10.48

to get wage $10.48/hr men need eduaction = (10.48-0.620)/0.506 = 19.486years

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