You have collected a sub-sample from the Current Population Survey for the western region of the United States. Running a regression of average hourly earnings (ahe) on an intercept only, you get the following result: 1. (a). Interpret the result. = 0 = 18.58 (b). You decide to include a single explanatory variable without an intercept. The binary variable DFemme takes on a value of "1" for females but is "0" otherwise. The regression result changes as follows: = 1xDFemme = 16.50×DFemme What is the interpretation now? (c). You generate a new binary variable DMale by subtracting DFemme from 1, and run the new regression: = 2xDMale = 20.09xDMale What is the interpretation of the coefficient now? (d). After thinking about the above results, you recognize that you could have generated the last two results either by running a regression on both binary variables, or on an intercept and one of the binary
You have collected a sub-sample from the Current Population Survey for the western region of the United States. Running a regression of average hourly earnings (ahe) on an intercept only, you get the following result: 1. (a). Interpret the result. = 0 = 18.58 (b). You decide to include a single explanatory variable without an intercept. The binary variable DFemme takes on a value of "1" for females but is "0" otherwise. The regression result changes as follows: = 1xDFemme = 16.50×DFemme What is the interpretation now? (c). You generate a new binary variable DMale by subtracting DFemme from 1, and run the new regression: = 2xDMale = 20.09xDMale What is the interpretation of the coefficient now? (d). After thinking about the above results, you recognize that you could have generated the last two results either by running a regression on both binary variables, or on an intercept and one of the binary
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter4A: Problems In Applying The Linear Regression Model
Section: Chapter Questions
Problem 5E
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