Introduction to Econometrics Fall 2008 Mid-Term Exam 2
Introduction to Econometrics Fall 2008 Mid-Term Exam 2 Please answer all questions and show your work. Clearly state your an swer to each problem. Answers without justi cation/explanation will not be given credit. Problem 1. (total 25 points) Using a sample of 1801 black individuals, the following earnings equation has been estimated: ln(earnings) = 7:059+0:147educ +0:049experience 0:201female (:135) (:008) R2 = 0:179; n=1801 (:007) where the standard errors are reported in parenthesis. (a) Interpret the coe¢cient estimate on female: (:036) In answering parts (b)-(c), you must write down: (i) the null and alter native hypotheses; (ii) the test statistic; (iii) the rejection rule. (b) Test the hypothesis that there is no di¤erence in expected earnings between black women and black men. Test this hypothesis against a two sided alternative, using the 5% signi cance level. (c) Dropping experience and female from the equation gives: ln(earnings) = 6:703+0:151educ (:182) (:012) R2 = 0:153; n=1801 1 Are experience and female jointly signi cant in the original equ
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