TotalIncome = 0+ . Age + 2Edu + 3Experience + «Female + Totallncome measures the

Question

TotalIncome = 0+ . Age + 2Edu + 3Experience + «Female + Totallncome measures the total income an individual makes in a year in dollars Age measures an individual's age in years Edu measures an individual's highest grade completed in years. 12 yrs is the equivalent to a high school graduate. 16 yrs a college graduate. 17 or more is a person with an advanced degree. Experience measures an individual's years of experience in the workforce measured in years. Female is dummy variable equal to 1 if an individual is female and equal to 0 if otherwise. 1) What is the dependent variable and how is it measured? 2) This model includes a dummy variable. What is the omitted group for this regression? 3) In general terms, what does the coefficient on Edu tell us?

Explanation / Answer

Answer to the question is as follows:

1. TotalINcome is dependent variable. It is measured in dollars made in a year

2. 'Female' is name of that dummy variable. The ommitted group for this regression are the 'male', but though emmitted it is expressed by the Female =0 rows.

3.The coefficient of Edu tells us by how much will total income change for a person'
highest individual grade.

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