Suppose we are interested in evaluating the impact on wages of being a college graduate and of residing in California. To this end we define the following dummy variablesif college graduateif not college graduatecoll =ncoll =if not college graduateif college graduate1cali =if residing in CaliforniaS 1if not residing in Californiancali =if not residing in Californiaif residing in Californiaand for wages denoting yearly wages, we estimate the following model of returns to educationwages = B1 coll+ B2ncoll + B3 cali + B4(coll x cali) + ewhere E[e|coll, cali] = 0. Which parameter or combination of parameters measures the increase in expected wages from obtaining a college degree (comparing to nothaving a college degree) when residing California?O a. None of the other options is correctO b. Bi – B2O c. B1 – B2 + ß4O d. B4O e. Bi + B3 – ßi – B4O f. Bi + B4 – ß2 – B4Clear my choice

Regression is defined as a statistical method which determines the relationship between a Dependent…

Answered: Suppose we are interested in evaluating…

Suppose we are interested in evaluating the impact on wages of being a college graduate and of residing in California. To this end we define the following dummy variables

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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