Consider the linear regression model: log(wage)-DB1+B2 MATH+B3 ARABIC +e where wage is the hourly wage and MATH is you score in Math courses and ARABIC is your score in Arabic courses. You would like to test the hypothesis that MATH and ARABIC have the same effect on log(wage) against the alternative that MATH has a greater weight on log(wage) a. Formally state the null and the alternative hypotheses

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Consider the linear regression model: log(wage)-DB1+B2 MATH+B3 ARABIC +e where wage is the hourly wage and MATH is you score in
Math courses and ARABIC is your score in Arabic courses. You would like to test the hypothesis that MATH and ARABIC have the same
effect on log(wage) against the alternative that MATH has a greater weight on log(wage)
a. Formally state the null and the alternative hypotheses
b. The OLS results from a sample of 300 observations are reported below
log(wage)= 2.55+ 0.85 MATH+2.75 ARABIC
R-square= 0.55)
se (1.55) (0.035) (1.25)
Test the hypothesis that you stated in (a) at 5% level given that the cov(b2.b3)%3D0.
Transcribed Image Text:Consider the linear regression model: log(wage)-DB1+B2 MATH+B3 ARABIC +e where wage is the hourly wage and MATH is you score in Math courses and ARABIC is your score in Arabic courses. You would like to test the hypothesis that MATH and ARABIC have the same effect on log(wage) against the alternative that MATH has a greater weight on log(wage) a. Formally state the null and the alternative hypotheses b. The OLS results from a sample of 300 observations are reported below log(wage)= 2.55+ 0.85 MATH+2.75 ARABIC R-square= 0.55) se (1.55) (0.035) (1.25) Test the hypothesis that you stated in (a) at 5% level given that the cov(b2.b3)%3D0.
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