seasonal patterns 9.2. Consider the following regression results ( ratios are in
ID: 3349917 • Letter: S
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seasonal patterns 9.2. Consider the following regression results ( ratios are in parentheses) +104.97Xy- 0.026Xy + (3.70) (-3.80) =1286 t= (4.67) 1.20x-hi + (0.24) 0.69Xy (0.08) -19.47Xe 266.06X7 (-0.40 6.94) 118.64X 110.61X (-3.04) (-6.14) R2 =0.383 n=1543 where Y = wife's annual desired hours of work, calculated as usual hours of work per year plus weeks looking for work = after-tax real average hourly earnings of wife Xs = husband's previous year x, = wife's age in years Xs = years of schooling completed by wife after-tax real annual earnings = attitude variable, 1 = if respondent felt that it was all right for a woman to work if she desired and her husband agrees, 0 otherwise Xy = attitude variable, 1 if the respondent's husband favored his wife's working, 0 = otherwise Xs = number of children less than 6 years of age = number of children in age groups 6 to 13 a. Do the signs of the coefficients of the various nondummy regressors make economic sense? Justify your answer. b. How would you interpret the dummy variables, X, and X? Are these dummies statistically significant? Since the sample is quite large, you may use the "2-f rule of thumb to answer the question.Explanation / Answer
a) As per economic theory X2 and X5 coefficient are thought to be positive in nature. Similarly coefficient of X3 X8 and X9 are expected to be -ve. Similarly coefficient of X4 might be +ve or -ve depending on age of wife and the no of offsprings Thus an interactive dummy of age and children aged under 6 or between 6 & 13 might shed some more options on relationship between age and desired hours of work.
b) Dummy variables X6 is not statistically significant so unable to explain its impact on dependent variable although X7 is statistically significant.
c) Age and education variables are not significant here as there certainly be some multicollinearty between them also some collinearty with the number of children. another factor that is missing is number of years of schooling completed by husband.
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