The following model allows the return to education to depend upon the total amount of both parents'education, called pareduclog(wage) = Bo + B1educ + Bzeduc.pareduc + Bzexper + Batenure + u%3Dthe return to another year of education in this model is:A log(wage)3D В + BzрareducAeduc(a) What sign do you expect for b2? Why?After doing estimation we got following result:(I)log(wage) = 5.65 + .047 educ + .00078 educ-pareduc +(.13) (.010)(.00021).019 exper + .010 tenure(.004)(.003)n = 722, R2 = .169.(II) When pareduc is added as a separate variable to the equation, we get:log(wage) = 4.94 + .097 educ + .033 pareduc - .0016 educ-pareduc(.017)(.38) (.027)(.0012)+ .020 exper + .010 tenure(.004)(.003)n = 722, R² = .174.Does the estimated return to education now depend positively on parent education? Test the nullhypothesis that the return to education does not depend on parent education. Should we keep or droppareduc in the model?

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MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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The following model allows the return to education to depend upon the total amount of both parents' education, called pareduc