Compile a regression table with each of the following

Question

Assignment

To complete this homework you will need to use the data set smallcps79. The data is from the 1979 CPS.

1. Compile a regression table with each of the following regressions:

(a) wage = β₀ + β₁education + β₂age + β₃female + β₄hours + e

(b) lwage= β₀ + β₁education + β₂age + β₃female + β₄hours + e

(c) wage = β₀ + β₁education + β₂age + β₃female + β₄hours + β₅age² + β₆female ∗education + e²

(d) lwage= β₀ + β₁education + β₂age + β₃female + β₄hours + β₅age² + β₆female ∗education + e

2. Choose the best specification from number 1, citing each of our 4 criteria in specification searches.

3. Interpret β₁ in equations a and b.

4. Interpret β₀, β₃, β₁, and β₆ in equation d.

5. Use a t-test to test if men and women have the same returns to education.

6. Are returns to age increasing, decreasing, or constant? Explain your answer.

7. There are no controls for ability here. How might this effect our regression results?

Attachment:- 79_data.rar