Question

Using 526 observations on workers, we include Educ (years of education), Exper (years of labor market experience), and Tenure (years with the current employer) in an equation explaining Wage. The estimated equation is:

ln (????????) = 0.284 + 0.092???????? + 0.0041?????????? + 0.022????????????

b)What is the estimated effect on Wage when an individual stays at the same firm for another year?

Answer 1

answer :

w= wages

btea= coefficient

x1=education years

x2= experience years

x3= tenure years

so equation is

(????????) = 0.284 + 0.092???????? + 0.0041?????????? + 0.022????????????

: the estimated effect on Wage will be :

education is a fixed variable while experience and tenure changes every year so :

w= 0.0041+ 0.022 = 0.261

so the change in experience and tenure will create 0.261 or 2.61% effect on wages.