Question

Answer 1 and 2 (all parts)

1.) Who are the key actors in the labor market and what motives do economists typically assign to them?

2.) Answer the questions using the multiple regression results presented below, with t-statistics in parenthesis beneath coefficient estimates. Assume that Y is weekly income, T is employer specific training (measured in minutes), ED is years of education, and F is a dummy variable equal to 1 if the individual is a female and equal to 0 if a male.

Y = 150.5 + 0.15(T) + 50.9(ED) + 222.45(F) + μ (7.36) (29.8) (3.22) (4.22)

a) Interpret the coefficient estimate on education.
b) Which independent variables are statistically significant? How do you know this?
c) How much will a two hour mandatory employer training impact your weekly earnings?
e) Your friend tells you that this firm pays female employees more than equally qualified male employees. Is there any evidence from the regression that women make more than men after controlling for all other variables in the model. Is your friend right?

Answer 1

There are many factors that shapes labor market and out of them few are remarkable and important mentioned as below

1) expertise level of workers

2) Formal education of workers

3) Experience of workers

Ans 2)

a)

If education is increased by 1 year then weekly income increases by 50.9 units keeping other things consistent

b)

If t statistic is more than 2.4 than it is statistically significant than zero even at 1% confiedance levels

If all the values given in parentheses are t values then all the variables are statistically significant

c)

If the mandatory training is increased then weekly wage will increase by 0.3 units

d)

Yes, From given regression equation if female is considered then reserve wage will be 372.95 that is 222.45 units more than female counterpart with same charecteristics