econometrics
Econ 390-03
Assignment 14
Due date is Sunday, Nov 29th 11:59 PM. Late submissions are not accepted.
Note I am aware the first half of this assignment is similar to assignment 13, but I want you to compare the cubic specification with a linear log specification.
1. Open the data “ch8_cps” on Rstudio
2. How many variable, number of observations, and dummy variables do we have?
3. Run a regression of ahe on age, what is the model and what is the predicted equation
4. What is the effect of age on ahe?
5. Provide the scatter plot and the fitted regression line.
6. Run a non-linear cubic regression of ahe on age (meaning run ahe on age, age squared, and age cubic.)
7. Write down the model and the predicted equation for part 6.
8. Looking at the significance of the cubic term in regression part 6, do you prefer this model (cubic) or would you go with a quadratic model? Or even a linear model?
9. In part 6 what is the effect of age on ahe? is it easy to read? (No)
10. Provide/add the fitted curve of regression part 6 on the scatter plot (you did in part 5).
11. Run a regression of ahe on log(age)
12. What is the effect of age on ahe in this model 11? Easy to read? (yes )
13. Provide/add the fitted curve of regression part 11 on the scatter plot (you did in part 5 and 10).
14. Write down the model and predicted equation for part 11.
15. What is Rsquared in regression in part3, regression in part6 and regression in part 11?
Documentation for CPS Data Used in Chapter 8
Each month the Bureau of Labor Statistics in the U.S. Department of Labor conducts the “Current Population Survey” (CPS), which provides data on labor force characteristics of the population, including the level of employment, unemployment, and earnings. Approximately 65,000 randomly selected U.S. households are surveyed each month. The sample is chosen by randomly selecting addresses from a database comprised of addresses from the most recent decennial census augmented with data on new housing units constructed after the last census. The exact random sampling scheme is rather complicated (first small geographical areas are randomly selected, then housing units within these areas randomly selected); details can be found in the Handbook of Labor Statistics and is described on the Bureau of Labor Statistics website (www.bls.gov).
The survey conducted each March is more detailed than in other months and asks questions about earnings during the previous year. These data are from the March 2009 survey.
Series in Data Set:
|
Female |
1 if female; 0 if male |
|
Age |
Age (in Years) |
|
Ahe |
Average Hourly Earnings in 2004 |
|
Yrseduc |
Years of Education |
|
Northeast |
1 if from the Northeast, 0 otherwise |
|
Midwest |
1 if from the Midwest, 0 otherwise |
|
South |
1 if from the South, 0 otherwise |
|
West |
1 if from the West, 0 otherwise |