Question

Please answer part C and D

rainfall.( cov(by b) = -0.00024 gUse the model in (d) to forecast yield h. Suppose that you wanted to forecast 1997 yiel your forecast from the model in (a)? What would it be from to decline after middle S.11 When estimating wage equations, we expect that young, inexperienced workers will have relatively age, as the worker nears retirement. This life-cycle pattern of wages can be captured by introducing low wages; with additional experience their wages will rise, but then begin experience and experience squared to explain the level of wages. If we also include years of education, we have the equation WAGE=B, +BEDUC+PEXPER+B4EXPER2 + e a. What is the marginal effect of experience on the mean wage? b. What signs do you expect for each of the coefficients B2, B3, and B4? Why? c.After how many years of experience does the mean wage start to decline? (Express your answer in terms of B's.) d. Estimating this equation using 600 observations yields WAGE=-16.308 +2.329EDUC+ 0.5240EXPER -- 0.007582EXPER2 (se) (2.745)(0.163) (0.1263) (0.002532) The estimated covariance between bą and bå is cov(b3, b estimates for the following: i. The marginal effect of education on mean wage ii. The marginal effect of experience on mean wage when EXPER = 4 ii. The marginal effect of experience on mean wage when EXPER = 25 iv. The number of years of experience after which the mean wage declines =-0.00030526. Find 95% interval 5 12 Thie oxoroio

Answer 1

C)After what years of exp Wage will decline

For that we need to see the regression eqn's Experience part

0.5240*Expr - 0.007582*Expr^2 < 0

So we need to find the ultimate negative effect for EXPR

0.5240*EXPR<0.007582*EXPR^2

EXPR>0.5240/0.007582

EXPR>69.11

So if EXPR is more than 69.11 then the mean wage will reduce

D) (i) 2.329 is the marginal effect on Wage (As 2.329 is the coeff of education)

(ii) PUT EXPR=4

=0.5240*Expr - 0.007582*Expr^2

=0.5240*4 - 0.007582*4^2

=1.98

So 1.98 is the marginal impact

(iii)Same Put EXPR=25

=0.5240*Expr - 0.007582*Expr^2

=0.5240*25 - 0.007582*25^2

=8.36

So 8.36 is the marginal impact

(iv)0.5240*Expr - 0.007582*Expr^2 < 0

As done in the above C question 69.11 Years of exp after which mean wage will decline

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