The manager of a human resources department wishes to predict the salary of an employee based on years of experience,x,and gender,g.(g = 1 for a male employee and 0 for a female employee.)A random sample of 50 employees results in the following least-squares regression equation: $\text { Salary } = 40,000 + 2,500 \mathrm { x } + 1,500 \mathrm {~g} + 1,000 \mathrm { xg }$ Interpret the value of the coefficient of the interaction term xg.
A)We predict that the growth rate of a male employee's salary will be $1,000 per year higher than that of a female employee.
B)We predict that a man with 0 years of experience will make $1,000 more than a woman with 0 years of experience.
C)We predict that the growth rate of a male employee's salary will be $1,000 per year.
D)We predict that a woman with 0 years of experience will make $1,000 more than a man with 0 years of experience.
E)We predict that the growth rate of a female employee's salary will be $1,000 per year.

Question

Quizplus · Accepted Answer

The coefficient of the interaction term $xg$ (1,000) indicates how the effect of years of experience on salary differs between genders. Specifically, it suggests that for each additional year of experience, the salary growth rate for male employees (g=1) is $1,000 higher than for female employees (g=0).

The Manager of a Human Resources Department Wishes to Predict Salary =40,000+2,500x+1,500 g+1,000xg\text { Salary } = 40,000 + 2,500 \mathrm { x } + 1,500 \mathrm {~g} + 1,000 \mathrm { xg } Salary =40,000+2,500x+1,500 g+1,000xg

The Manager of a Human Resources Department Wishes to Predict $\text { Salary } = 40,000 + 2,500 \mathrm { x } + 1,500 \mathrm {~g} + 1,000 \mathrm { xg }$