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a) Use OLS to estimate the equation
log(wage) = ß0+ ß1educ+ß2 exper + ß3exper +u
and report the result using the usual format.
b) Is exper2 statistically significant at the 1% level?
c) Using the approximation
%?wage = 100(ß2+2ß3 exper)?exper,
find the approximate return to the fifth year of experience. What is the approximate return to the twentieth year of experience?
At what value of exper does the additional experience actually lower predicted log (wage)? How many people have more experience in this sample?
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