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

Exercise 24

Use the data in SLEEP75.RAW for this exercise. The equation of interest is

(i) Estimate this equation separately for men and women and report the results in the usual form. Are there notable differences in the two estimated equations?

(ii) Compute the Chow test for equality of the parameters in the sleep equation for men and women. Use the form of the test that adds male and the interaction terms male •totwrk, …, male •yngkid and uses the full set of observations. What are the relevant df for the test? Should you reject the null at the 5% level?

(iii) Now, allow for a different intercept for males and females and determine whether the interaction terms involving male are jointly significant.

(iv) Given the results from parts (ii) and (iii), what would be your final model?