Model 2 a) What do you learn from Model 2 about the relationship between wages a

Question

Model 2

a) What do you learn from Model 2 about the relationship between wages and experience?

b) Is it fair to say that experience accounts for more of the variation in wages than education does? Explain why or why not.

. desc wage eauc exper storage display value label variable name type format variable label float %9.0g byte %8.0g byte %8.0g hourly wage years of schooling years of workforce experience wage educ exper sum wage educ exper Variable I Obs Mean Std. Dev Min Max 1260 1260 1260 6.30669 12.56349 18.20635 4.660639 2.624489 11.96349 77.72 17 48 1.02 wage educ| exper

Explanation / Answer

A) Wages=4.64+0.091*Experience

R-Square=0.055

It can be said from the above two that, Wages are very weakly correlated with Experience and only 5% of the variation in Wages is explained by Experience

B) It could be the case as only 5% is explained by experience in the wage rate calculations

C) 0.091+-Z*SE

Z is the value at 90% CI which is 1.645 and SE is the Standard Error of the coefficient which is 0.0106 here

So, CI=(0.091-1.645*0.0106,0.091+1.645*0.0106 )=(0.074,0.108)

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