Homework 4 (4 Points), due at the beginning of class on September
26, 2016
Please use Wage data posted on my webpage to answer following questions. First, focus on
the variables wage, dummy variable female, and another dummy variable married.
• Q1 (1 point) Please use the command reg to (1) find the average wage for unmarried
persons, and (2) report the two-sample t test for the null hypothesis that on average
an unmarried person earns same wage as a married person. (Do not use command
ttest!)
• Q2 (2 point) Please interpret each β in the following regression
wage = β0 + β1 female + β2 married + β3 (female ∗ married),
where female ∗ married is the interaction term. Report the F test for the null hypothesis that the effect of gender on wage does not depend on the marital status. Please
mathematically specify the null hypothesis. Run a restricted regression that imposes
the null hypothesis. Show me the process of getting the F statistic. What is your
conclusion?
• Q3 (1 point) Focus on the variables wage, exper (working experience) and numdep
(number of kids). Please test the hypothesis that whether having kids has no effect on
the relationship between wage and exper. Hint: generate a dummy called kid using
the following command
gen kid = (numdep>0)
This example shows you how to generate a dummy variable based on a numerical
variable. An equivalent way to get the dummy is
gen kid = 0
replace kid = 1 if numdep>0
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