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

Exercise 26

Use the data in WAGE1.RAW for this exercise.

(i) Use equation (7.18) to estimate the gender differential when educ = 12.5. Compare this with the estimated differential when educ = 0.

(ii) Run the regression used to obtain (7.18), but with female_(educ _ 12.5) replacing female •educ. How do you interpret the coefficient on female now?

(iii) Is the coefficient on female in part (ii) statistically significant? Compare this with (7.18) and comment.

Step 1 of 3

(i)

In the model given by the following:

When and

When and

Hence, the gender-differential is:

When and

Whenand

Hence, the gender-differential is:

This indicates that the gender-differential is 0.297 when and 0.227 when