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

Exercise 11

In Example 7.12, we estimated a linear probability model for whether a young man was arrested during 1986:

(i) Estimate this model by OLS and verify that all fitted values are strictly between zero and one. What are the smallest and largest fitted values?

(ii) Estimate the equation by weighted least squares, as discussed in Section 8.5.

(iii) Use the WLS estimates to determine whether avgsen and tottime are jointly significant at the 5% level.

Step 1 of 4

(i)

Estimate the model given by:

The result obtained is as follows:

The fitted valued of are strictly between zero and one. The smallest fitted value ofis 0.006643 and the largest fitted value ofis 0.55769.