A local company is accused of both sex and age discrimination. Data was collected for 71 employees on Salary, Gender (females = 1), age of the employee, Training (yes = 1), and years of experience. Assume there are no outliers in the data.
Equation #1
Salary = b0 + b1*Gender + b2*Age + b3*Trained + b4*Experience + b5*Experience2
a) Test the following hypotheses with a Type I error of 5%.
H0 : β1 = 0
Ha : β1 ≠ 0
What does this hypothesis test tell us?
b) Based on your estimate of Equation #1, does experience have an impact on wages?
c) Can you improve upon this model? If yes, what does your new model tell you about the impact of experience on wages?