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The following model allows the return to education to depend upon the total amount o both parents' education, called pareduc: log(wage) = Bo+ Bi educ + B2 educ pareduc + B3 exper + B3 tenure + u a) Show that in decimal form, the return to another year of education in this model i i. A log(wage) / Aeduc= ß1+ B2 pareduc for Q. 3

The following model allows the return to education to depend upon the total amount o both parents' education, called pareduc: log(wage) = Bo+ Bi educ + B2 educ pareduc + B3 exper + B3 tenure + u a) Show that in decimal form, the return to another year of education in this model i i. A log(wage) / Aeduc= ß1+ B2 pareduc for Q. 3

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter5: Inverse, Exponential, And Logarithmic Functions
Section5.6: Exponential And Logarithmic Equations
Problem 69E
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The following model allows the return to education to depend upon the total amount of both parents' education, called pareduc: log(wage) = Bo + B1 educ + B2 educ pareduc + B3 exper + B3 tenure + u a) Show that in decimal form, the return to another year of education in this model is i. A log(wage) / Aeduc= B1+ B2 pareduc b. What sign do you expect for B2 ? b) Using the data in WAGE 2, the estimated equation is log (wage) = 5.65 + .047 educ + .00078 educ-pareduc + (.13) (.010) (.00021) .019 exper + .010 tenure (.004) (.003) n = 722, R² = .169. i. b. Interpret the coefficient on the interaction term. It might help to choose two specific c. values for pareduc- for example, pareduc = 50 if both parents have a college education, or pareduc = 30 if both parents have a high school education – and compare the estimated return to educ.
Transcribed Image Text:The following model allows the return to education to depend upon the total amount of both parents' education, called pareduc: log(wage) = Bo + B1 educ + B2 educ pareduc + B3 exper + B3 tenure + u a) Show that in decimal form, the return to another year of education in this model is i. A log(wage) / Aeduc= B1+ B2 pareduc b. What sign do you expect for B2 ? b) Using the data in WAGE 2, the estimated equation is log (wage) = 5.65 + .047 educ + .00078 educ-pareduc + (.13) (.010) (.00021) .019 exper + .010 tenure (.004) (.003) n = 722, R² = .169. i. b. Interpret the coefficient on the interaction term. It might help to choose two specific c. values for pareduc- for example, pareduc = 50 if both parents have a college education, or pareduc = 30 if both parents have a high school education – and compare the estimated return to educ.
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