Question

Suppose the following regression equation was generated from sample data relating annual salary to experience, gender, and marital status. Gender is represented by a dummy variable, FEMALEi where FEMALEi=1 if employee i is female and FEMALEi=0 if employee i is male. Marital status is represented by a dummy variable MARRIEDi where MARRIEDi=1 if employee i is married and MARRIEDi=0 if employee i is single. SALARYi=45399.358869+522.095299EXPERIENCEi−2445.498353FEMALEi−42.875876EXPERIENCEi⋅FEMALEi+10156.223595MARRIEDi−98.638952EXPERIENCEi⋅MARRIEDi−14314.347804FEMALEi⋅MARRIEDi+ei

1)According to the regression equation above, what is the estimated change in salary resulting from one additional year of experience for married women? Round your answer to two decimal places.

Answer 1

For married women,

The estimated regression equation is

SALARYi=45399.358869+522.095299*EXPERIENCEi−2445.498353*1−42.875876EXPERIENCEi*1+10156.223595*1−98.638952EXPERIENCEi*1−14314.347804*1*1+ei

or, SALARYi = (45399.358869 -  2445.498353 + 10156.223595 - 14314.347804) + (522.095299 - 42.875876 - 98.638952)*EXPERIENCEi + e_i

or,  SALARYi = 38795.736307 + 380.580471*EXPERIENCEi + e_i

1) The estimated change in salary resulting from one additional year of experience for married women = 380.580471