Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 3

The data set in CEOSAL2.RAW contains information on chief executive officers for U.S. corporations. The variable salary is annual compensation, in thousands of dollars, and ceoten is prior number of years as company CEO.

(i) Find the average salary and the average tenure in the sample.

(ii) How many CEOs are in their first year as CEO (that is, ceoten = 0)? What is the longest tenure as a CEO?

(iii) Estimate the simple regression model

and report your results in the usual form. What is the (approximate) predicted percentage increase in salary given one more year as a CEO?

Step 1 of 3

The average of a variable is found by summing the total sample value under that variable and then dividing it by number of sample value. The average salary is come out to be 865.864, which means $865,864, since salary is in thousands of dollars, therefore the average ceoten is about 7.95.