Please answers all parts of the question and write clearly and I will give you a
ID: 2946933 • Letter: P
Question
Please answers all parts of the question and write clearly and I will give you a good rating!
1. Consider the following estimated regressions: log(wage)- 1 +0.05union wage - 30 + 10union union = 0.2 0.05/Q union - 0.2 + 0.05log(IQ) log(wage)-1 +0.93 log(educ) +0.04exper - 0.0006exper2 0.17female - 0.011female * exper where, wage is in dollars per hour, union is a dummy variable that takes 1 when the worker is unionized, IQ is in points, education and experience are in years and female is another binary variables that takes the 1 when the worker is female, (a) Provide an interpretation for the coefficient on union in equations (1) and (2). How are they different? (b) Provide an interpretation for the coefficient on IQ in equations (3) and (4). How are they different? In the following, you need to be explicit about the ceteris paribus assumption. (c) Provide an interpretation for the coefficient on educ in equation (5)Explanation / Answer
a) eq 1... log (Wedge) = 1+ 0.05*union
where union is either 1 (unionized) or 0 (non-unionized)
So when the worker is unionized it shos that log(wedge) increases by 0.05 unit when the worker is unionized and if a worker is not unionized then his log(Wedge) is 1
eq2... Wedge = 30 + 10*Union
where we say that if a worker is unionized his/her wedge is 30+10*1 = 40 and so we can say that his wedge increases by 10units while if a worker is not unionized his/her wdge will be 30
The difference is only in Wedge and Log(Wedge) where in the 1st equation log (Wedge) was linearly dependent on Union while in the 2nd equation Wedge is lineraly dependent on Union.
b) eq3...union=0.2+0.05*IQ
which shos that if IQ increases by 1 unit union value is going to increase by 0.05 units
eq4... union=0.2+0.05*log(IQ)
which shos that if log(IQ) increases by 1 unit union value is going to increase by 0.05 units
Here also the only difference is IQ and log(IQ) which is now the independent variable which affects the dependent variable union. So in the 3rd eqn we can see that Union is lineraly dependent on IQ while in eq4 we can say that union is linearly dependent on log(IQ)
c) in eq 5 the educ is in the log where the oefficient of log(educ) is 0.93 and the whole equation has dependent log(Wedge)
So we say that 1 unit change in log(educ) changes the value of log(Wedge) by 0.93 units in the same direction.
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