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

Exercise 8

Let mvpi. be the marginal value product for worker i, which is the price of a firm's good multiplied by the marginal product of the worker. Assume that

log(mvpi) = ?0 + ?1xa + ... + ?kXik + ui

wagei = max(mvpi,,minwagei),

where the explanatory variables include education, experience, and so on, and minwagei is the minimum wage relevant for person i. Write log(wagei) in terms of log(mvpi) and log(m inwagei).