Test at a = 0.05. Suppose you have been hired by a union that wants to convince

Question

Test at a = 0.05. Suppose you have been hired by a union that wants to convince workers in local dry cleaning establishments that joining the union will improve their well-being. As your first assignment, your boss asks you to build a model of wages for dry cleaning workers that measures the impact of union membership on those wages. Your first equation is: W = - 11.40 + 0.30A, - 0.003A^2 + 1.00S, + 1. 2U, (0.10) (0.001) (0.20) (1.0) T = 34: R^2 = 0.54 where: W, = the hourly wage (in dollars) of the ith worker A1 = the age of the of the ith worker S1 = the number of years of education of the ith worker U1 = 1 if the of the ith worker is a union member: 0 if not (this is called a "dummy" variable) Test the overall significance of the model. Clearly state the test and results Test the individual significance of the (Numbers arc expected.) Explain the terms A and A^2 What is the marginal effect of age on wage, and exactly what is meant by the "marginal effect of age on wage

Explanation / Answer

answer a-i). R2=0.54, we go for F-test and calculate F=(R2/(1-R2))*(N-n-1)/n, here N=32, n=5

F=(0.54/0.46)*28/5=6.57 with 28, 5 df

p-value=0.022

R2 is significant and model is siginicant and modek well explains the variability

answer a-ii)

A, A2 and S are significant

critical value of t(0.05, 28)=2.05

answer b)

A-linear effect of age

A2- quadratic effect of age

marginal effect of A is 0.3 and it is positive. so age is more the there will be more wage

answer c) The coefficient of A2 =-0.003 tells both the direction and steepness of the curvature (a positive value indicates the curvature is upwards while a negative value indicates the curvature is downwards) here it is negative curvatue is downwards.

answer d) Consider interpreting coefficients from a regression where the dependent variable of interest are in log form, the coefficients can no longer be interpreted as marginal effects.

answer e)The constant term or intercept is in part estimated by the omission of predictors from a regression analysis. In essence, it serves as a garbage bin for any bias that is not accounted for by the terms in the model

answer f) the coefficitent of U is positive and joining the union will improve their well-being. but it is not significant.

as t-value is insignificant in question a-ii)

variable beta S.E. t=beta/SE A 0.3 0.1 3* A2 0.003 0.001 3* S 1 0.2 5* U 1.2 1 1.2

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.