Question

700 income-earning individuals from a district were randomly selected and asked whether they were employed by the government (Gov = 1) or failed their entrance test (Gov = 0); data were also collected on their gender (Male = 1) if male and = 0 if female) and their years of schooling (Schooling, in years). The following table summarizes several estimated models.

Dependent Variable: Gov Linear Linear Probit Logit Probability Probit Logit Probability Probit 0.548 (0.091) 4.352 (0.125) 0.234 (0.025) .291) 344 (0.096) 7.702 (0.098) 0.179 (0.021) 1.238) Schooling Male Male X Schooling Constant 0.035 0.551 (0029) (0.062) (0.003) 0.272 0.242 0.455 0.050 8.146 (0.358)(0.800 0.027) 4.107 0.172 0.152 1.027

Matthew has 16 years of schooling. What is the probability that he will pass the test?

According to the logit model?

According to the linear probability model (LPM)?

Report your answers to four decimal places.

Answer 1

Solution Given that 00 income canin individuols fom a disteic t tandomly selected a es c hede schooling -16 Accodding to the logit mode l om given drta P(pass)816 0 55I C6)a :-8-146 +8.8160 67oo :. lo9it model Accozding to Incas poobabildy model P(pass) 0 12 t0 035 Ci6) 0.3880 einea0 osobabilly model :C03880