Question

You are interested in looking at the returns to experience (how much wages go up for each additional year a person works). There are several possible models you can run. Answer the questions related to the following models. Please note these values are not calculated from actual data

wagei= 10+5.5*experiencei+2*experiencei*health+yXi+Ei

How much would you expect your wage to go up by if you had an additional year of experience and worked in the health sector?

How much would you expect your wage to go up by if you had an additional year of experience and worked in an industry that was not health related?

How much would you expect your wage to go up by if you had an additional four years of experience and worked in the health sector?

Answer 1

How much would you expect your wage to go up by if you had an additional year of experience and worked in the health sector?

Answer : Here if we increase experience by 1 year and work in health sector

so Here

wage increase = 5.5 + 2 = 7.5

How much would you expect your wage to go up by if you had an additional year of experience and worked in an industry that was not health related?

Answer :

Here if we increase experience by 1 year and not work in health sector

so Here

wage increase = 5.5 + 2 * 0 = 5.5

How much would you expect your wage to go up by if you had an additional four years of experience and worked in the health sector?

Answer : Here we increase experience by 4 year and worked in health sector

Wageincrease = 5.5 * 4 + 2 * 4 * 1 = 30