Using data from 50 workers, a researcher estimates Wage = 0 + 1 Education + 2Exp

Question

Using data from 50 workers, a researcher estimates Wage = 0 + 1 Education + 2Experience +3Age + , where Wage is the hourly wage rate and Education, Experience, and Age are the years of higher education, the years of experience, and the age of the worker, respectively. A portion of the regression results is shown in the following table. Coefficients Standard Error t Stat p-Value Intercept 7.42 4.14 1.79 0.0797 Education 1.53 0.39 3.92 0.0003 Experience 0.47 0.20 2.35 0.0231 Age 0.07 0.08 0.88 0.3861 a-1. Interpret the point estimate for 1. As Education increases by 1 unit, Wage is predicted to increase by 1.53 units, holding Age and Experience constant. As Education increases by 1 unit, Wage is predicted to increase by 0.47 units, holding Age and Experience constant. As Education increases by 1 unit, Wage is predicted to increase by 1.53 units. As Education increases by 1 unit, Wage is predicted to increase by 0.47 units. a-2. Interpret the point estimate for 2. As Experience increases by 1 unit, Wage is predicted to increase by 1.53 units. As Experience increases by 1 unit, Wage is predicted to increase by 0.47 units. As Experience increases by 1 unit, Wage is predicted to increase by 1.53 units, holding Age and Education constant. As Experience increases by 1 unit, Wage is predicted to increase by 0.47 units, holding Age and Education constant. b. What is the sample regression equation? (Negative values should be indicated by a minus sign. Round your answers to 2 decimal places.) 1formula326.mml + Education + Experience + Age c. Predict the hourly wage rate for a 40-year-old worker with 4 years of higher education and 3 years of experience. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 1formula327.mml

Explanation / Answer

a-1 The estimation for beta1 will be simply given by the coefficient of education. that is 1.53

The coefficient also determines how much estimated wage will increase as education increases. Thus the correct answer would be as education increases by 1 unit wage is predicted to be increased by 1.53 units holding age and experience constant.
a-2 Point estimate for beta2 will be simply the coefficient of experience. that is 0.45.
Its interpretation would be as experience increases by 1 unit, wage is predicted to be increased by 0.47 units, holding age and education constant.

b Sample regression equation will be,
Y-hat=7.42+1.53* education +0.47 experience +(-0.07) age
c.
Y-hat= 7.42+1.53* 4 +0.47 *3 -0.07*40
=12.15

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