Estimate the average hourly wages

Assignment Help Econometrics

Reference no: EM133202457

Question 1. Consider the following hypothetical system of simultaneous equations in which the Y variables are endogenous and the X variables are predetermined variables.

675_predetermined variables.jpg

Check the order condition of identifiability of each of the above structural equations.

Question 2. Using a sample of 400 full time workers, researchers is interested in the question as to whether women are systematically underpaid compared with men. First a researcher estimates the average hourly wages in the sample for men and women, which are 5.91 birr and 5.09 birr respectively.

a. Do these numbers give an answer to the question of interest? Why not?

The researcher also runs a simple regression of an individual's wage on a gender dummy, equal to 1 for males and 0 for females. This gives the results reported in

Variable	Estimate	Standard error	t-ratio
constant	5.09	0.58	8.78
Male	0.8?	0.15	5.47
n=400 R²=0.36

b. How do you interpret the coefficient estimate of 0.82?
c. How can you interpret the estimated intercept of 5.09?

Question 3. Why do we need to test for non-stationarity?

Reference no: EM133202457

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