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

Exercise 3

Use the data in WAGE1.RAW for this exercise.

(i) Use OLS to estimate the equation log(wage) = ????0 + ????1educ + ????2exper + ????3exper2+ u and report the results using the usual format.

(ii) Is exper2 statistically significant at the 1% level?

(iii) Using the approximation

find the approximate return to the fifth year of experience. What is the approximate return to the twentieth year of experience?

(iv) At what value of exper does additional experience actually lower predicted log(wage)? How many people have more experience in this sample?

Step 1 of 4

(i)

The estimated equation comes out to be: