ECO82001: Report Writing Assignment-Economics and Quantitative Analysis

Internal Code:MAS21

Report Writing Assignment:

Question: (a)Obtain summary statistics and histograms for the variables WAGE and EDUC. Discuss the data characteristics. (b) Estimate the linear regression WAGE = ?1 + ?2EDUC + ? and interpret the slope. (c) Calculate the residuals and plot them against EDUC. Are any patterns evident and, if so, what does this mean? (d) Estimate the quadratic regression WAGE = ?1 + ?2EDUC2 + ? and interpret the results. Estimate the marginal effect of another year of education on wage for a person with 12 years of education, and for a person with 14 years of education. Compare these values to the estimated marginal effect of education from the linear regression in part (b). (e) Construct a histogram of ln(WAGE). Compare the shape of this histogram to that for WAGE from part (a). Which appears to be more symmetric and bell-shaped? (f) Estimate the log-linear regression ln(WAGE) = ?1 + ?2EDUC + ? and interpret the slope. Estimate the marginal effect of another year of education on wage for a person with 12 years of education, and for a person with 14 years of education. Compare these values to the estimated marginal effects of education from the linear regression in part (b) and quadratic in part (d) .