Part 4 The following multiple regression model uses lwage (which is the value of
ID: 2440843 • Letter: P
Question
Part 4 The following multiple regression model uses lwage (which is the value of log(monthly wage) as dependent variable, educ (education years) and LIQ (whiclh is the value of log(IQ score)) as independent variables to run a regression as STATA commands and outputs are given on the STATA output page. Answer the following questions. (27 points) lwage-po+pi educ +?2 LIQ + u According to the STATA output, what are the minimum and the maximum for education years (denoted as educ) in the sample? (4 points) Write down the estimation result in an equation form based on the STATA output. Make sure to include all estimated coefficients, number of observations and R-squared. (8 points) Interpret the coefficient in front of educ. (5 points) Interpret the coefficient in front of LIQ. (5 points) a) b) c) d)Explanation / Answer
a. The minimum and maximum of the education years are 9 years and 18 years.
b. lwage= 3.686692+.0400896*educ+.554131*LIQ, where n= 935, R squared= 0.1296
c. The coefficient of educ says that with an increase of one year of education, the wages or the monthly wage increased by 4 per cent.
d. The coefficient of LIQ states that with a one per cent increase in the IQ score, the monthly wage increases by 55 per cent.