Wage = 10 + 1.2 × male + 2 × educ + 0.15 × (male × educ) + u %3D he dependent variable is hourly wage. There are three independent variables: a binary variable ndicating male, years of education, and an interaction between male and educ. a) Plot the relationship between wage and education for males and females separately. Put wage on the rertical axis and education on the horizontal axis. (hint: see Panel (b) of Figure 8.8 in the textbook; You nay draw the graph on software or on a piece of paper and paste the snapshot below.)
Wage = 10 + 1.2 × male + 2 × educ + 0.15 × (male × educ) + u %3D he dependent variable is hourly wage. There are three independent variables: a binary variable ndicating male, years of education, and an interaction between male and educ. a) Plot the relationship between wage and education for males and females separately. Put wage on the rertical axis and education on the horizontal axis. (hint: see Panel (b) of Figure 8.8 in the textbook; You nay draw the graph on software or on a piece of paper and paste the snapshot below.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Econometrics
Transcribed Image Text:3. Given the following regression:
Wage = 10 + 1.2 × male + 2 × educ + 0.15 × (male x educ) + u
The dependent variable is hourly wage. There are three independent variables: a binary variable
indicating male, years of education, and an interaction between male and educ.
(a) Plot the relationship between wage and education for males and females separately. Put wage on the
vertical axis and education on the horizontal axis. (hint: see Panel (b) of Figure 8.8 in the textbook; You
may draw the graph on software or on a piece of paper and paste the snapshot below.)
(b) According to the regression function above, (1) which gender has a higher base wage (for people with
no education)? (2) which gender has higher return to education? (3) what's effect of an additional year of
education on wage for females? (4) what's the effect of an additional year of education on wage for males?
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