Question

Using data from 50 workers, a labour economist runs a multiple regression of Y (hourly wage in $) on X1 (years of education), X2 (gender) and X3 (an interaction between X1 and X2), and obtains the following regression results.

	Coefficients	Standard error
Intercept	-16.78	2.14
Years of education	2.77	0.16
Gender (coded 1 for female and 0 for male)	8.84	3.01
Interaction between years of education and gender	-1.02	0.22

Based on the above information, the estimated effect of X1 (years of education) on Y (hourly wage) for female employees is ___________.

	a.	11.61
	b.	8.84
	c.	1.02
	d.	1.75

Answer 1

Given:

Using data from 50 workers, a labour economist runs a multiple regression of Y (hourly wage in $) on X1 (years of education), X2 (gender) and X3 (an interaction between X1 and X2), and obtains the following regression results.

	Coefficients	Standard error
Intercept	-16.78	2.14
Years of education	2.77	0.16
Gender (coded 1 for female and 0 for male)	8.84	3.01
Interaction between years of education and gender	-1.02	0.22

Based on the above information, the estimated effect of X1 (years of education) on Y (hourly wage) for female employees is

Estimated effect = 2.77 + 8.84 = 11.61........ ( for female employees, X2 = 1).

So the estimated effect of X1 (years of education) on Y (hourly wage) for female employees is 11.61.

Answer - option a