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In answering these below, paste the Stata output only when it is asked. When
pasting output, use the copy as picture option. When testing a hypothesis, be sure
to mention the distribution of the test statistic, its degrees of freedom, the level of
significance and the associated critical value. DO NOT USE THE STATA test
COMMAND.
It would be easiest if you inserted your answer between the questions below and
returned this document. Rename the document as `your name.docx’ and upload it
on LMS.
You have to do this exam by yourself. You are allowed to consult the textbook and
your notes. You are NOT allowed to consult anybody whether by speaking, by text
messages or email or any other means. Violations will attract penalties as per
Ashoka policy.
1. (a) Regress log of wages on a constant and the female dummy. Paste output
here.
The value of the coefficient on the female dummy is -0.855. It measures the
average difference in hourly wage between a man and a woman. The woman
earns 0.8 dollars less than the man. The average wage for a woman, therefore, is
4.13 (when female = 0, wage for a man) – 0.855 = 3.275.
(c) Test the null hypothesis that the coefficient on female dummy is -0.5 against
the alternative that the coefficient on female dummy is less than -0.5. Show your
workings.
Ho : 1 = -0.5
Ha : 1 < -0.5
At a 5% significance level,
with a degree of freedom n – k – 1 = 1000-2 = 998
2. (a) Regress log of wages on a constant, the female dummy, age of the
individual and the square of age. Paste your output here.
(b) Controlling for age and the square of age does not seem to substantially
change the coefficient of the female dummy. Why is that so?
[5+5]
This is because the wage differential between man and woman cannot be
accounted for by factors such as age, agesq. It because of factors associated with
gender which we have not accounted for in the regression. Therefore, there is
not much change between the two coefficients as the effect of the other variables
is not that significant.
3. (a) Regress log of wages on a constant, the female dummy, age of the
individual the square of age and the social group dummies for scheduled caste,
for scheduled tribe and for other backward caste. Note the omitted category is
the general castes (or forward castes). Paste your output here.
(b) Test the null hypothesis that none of the social group dummmies matter, i.e.,
controlling for sex, age and square of age, the average of log wages is the same
for all categories: scheduled castes, scheduled tribes, other backward castes and
the general (forward) castes. Do NOT use the Stata test command.
Ho : 3 = 4 = 5
q=3
4. (a) Regress log of wages on a constant, the female dummy, age of the
individual the square of age, the social group dummies for scheduled caste, for
scheduled tribe and for other backward caste, and the education dummies for
illiterate, literate, primary, secondary, and higher secondary. Paste the output
here.
Source SS df MS Number of obs = 1,000
F(11, 988) = 85.16
Model 443.473774 11 40.3157976 Prob > F = 0.0000
Residual 467.707951 988 .473388614 R-squared = 0.4867
Adj R-squared = 0.4810
Total 911.181724 999 .912093818 Root MSE = .68803
5. (a) To the explanatory variables in the regression in Qn 4(a), add land owned
(LandO) and land possessed (LandP) and re-run the regression. DO NOT paste
the output.
(b) Is either of the land variables individually significant at the 5 or 10% level?
0.0000967/0.0000767 = 1.261
At a 5% significance level,
with a degree of freedom n – k – 1 = 912 - 14 = 898
-0.0000526/0.0000769 = -0.684
At a 5% significance level,
with a degree of freedom n – k – 1 = 912 - 14 = 898
(c) Now drop land owned (LandO) and re-run the regression. Is the included
land variable significant at the 5 or 10% level?
-0.000039/0.0000177 = -2.203
At a 5% significance level,
with a degree of freedom n – k – 1 = 912 - 14 = 898