4. A wage regression model is given as: Wages-0 + 1 educ + Exp + e, where wages

Question

4. A wage regression model is given as: Wages-0 + 1 educ + Exp + e, where wages are measured in thousands of dollars per year, educ in years of education completed after high school and Exp in years of work experience a. List the regressors. b. List the explanatory variables c. Give a specix of an omitted variable that might be in the error term in this model? d. List the parameters of this model? e. How would you interpret ,-45? f. If ,-2.5, what does this model predict would happen if years of education increased by 2? g. What is the difference between , = 2.5 and = 2.5?

Explanation / Answer

a. regressors = educ , Exp

that is , education and experience. They are independent variables.

b. explanatory variables = educ , Exp

d. parameters = Beta1 , Beta2

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