Consider the following two estimated models (1) and (2), with all the variables already described in Problem II
Dependent variable: —————————- log(wage) (1) (2) —————————————– tenure 0.045*** 0.051*** (0.008) (0.007) married 0.133 (0.187) educ 0.082*** 0.085*** (0.011) (0.007) marriedten 0.0004 (0.007) edumarried 0.002 (0.014) tenursq -0.001*** -0.001*** (0.0003) (0.0002) Constant 0.336** 0.369*** (0.143) (0.091) —————————————– Observations 526 526 R2 0.350
Note: *p<0.1; **p<0.05; ***p<0.01
a. From model (1), what is the estimated return to education for: i) a married worker; ii) a non-married worker? (
b. Based on the estimated model (1) and with a 5% significance level, assess the statistical significance and the importance of the quadratic variable tenure 2 in explaining changes to workers’ wages. (State clearly your null and alternative hypotheses, the statistics to be used, and your conclusion)
c. From model (1), what is the estimated effect of an additional tenure year on the wage of: i) a married worker? ii) a non-married worker?
d. From the estimated model (1), at how many years does an additional tenure year actually lower the predicted log(wage) for: i) a married worker? ii) a non-married worker?
e. From model (1), calculate the estimated effect of the 19th year of tenure on the wage for: i) a married worker; ii) a non-married worker.
f. From the estimated model (1), provide an appropriate interpretation for each of the coefficient estimates associated with the variables married, educ, and edu.married.
g. Based on estimated models (1) and (2), determine what is the estimated percentage wage difference between married and non-married workers?
h. Based on estimated models (1) and (2) and with a 5% significance level, test whether the marital status has a statistically significant impact on wages that workers receive (state clearly your null and alternative hypotheses, the statistics to be used, and your conclusion).
