# Consider a model where the return to education depends upon the amount of work expe‑ rience

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Consider a model where the return to education depends upon the amount of work expe‑ rience 1 answer below » Consider a model where the return to education depends upon the amount of work expe‑ rience (and vice versa): log( wage ) 5 b 0 1 b 1 educ 1 b 2 exper 1 b 3 educ ? exper 1 u . Show that the return to another year of education (in decimal form), holding exper fixed, is b 1 1 b 3 exper . State the null hypothesis that the return to education does not depend on the level of exper . What do you think is the appropriate alternative? Use View complete question » Consider a model where the return to education depends upon the amount of work expe‑ rience (and vice versa): log( wage ) 5 b 0 1 b 1 educ 1 b 2 exper 1 b 3 educ ? exper 1 u . Show that the return to another year of education (in decimal form), holding exper fixed, is b 1 1 b 3 exper . State the null hypothesis that the return to education does not depend on the level of exper . What do you think is the appropriate alternative? Use the data in WAGE2.RAW to test the null hypothesis in (ii) against your stated alternative. Let 1 denote the return to education (in decimal form), when expe r 5 10: 1 5 b 1 1 10 b 3 . Obtain ˆ 1 and a 95% confidence interval for 1 . ( Hint: Write b 1 5 1 2 10 b 3 and plug this into the equation; then rearrange. This gives the regression for ob- taining the confidence interval for 1 .) View less » Aug 20 2015 11:27 AM