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Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge
Edition 6ISBN: 130527010XIntroductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge
Edition 6ISBN: 130527010XA model that allows major league baseball player salary to differ by position is
where outfield is the base group.
(i) State the null hypothesis that, controlling for other factors, catchers and outfielders earn, on average, the same amount. Test this hypothesis using the data in MLB1.RAW and comment on the size of the estimated salary differential.
(ii) State and test the null hypothesis that there is no difference in average salary across positions, once other factors have been controlled for.
(iii) Are the results from parts (i) and (ii) consistent? If not, explain what is happening.
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Step 1 of 3
The model that allows major league baseball player salary to differ by position is given as follows:
(i)
On estimating the model the result will be as follows:
On testing for the level of significance of the difference of the average earnings of catchers and outfielders, it can be observed that the coefficient of 
is 0.25356 with the p-value 0.0543 which is less than the critical p-value of 0.10 at 10% level of significance indicating that the variable
is statistically significant at 10% level of significance.
It shall be noted that catchers has higher salary than outfielders by the following:
Step 2 of 3
Step 3 of 3
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