Question

​It's often said that earnings are generally higher in urban areas than in rural areas. By why is this​ so? Perhaps​ it's because urban areas attract a cluster of​ employers, producing many employment opportunities. To test this​ possibility, a national statistics agency used census data to run a multivariate regression of weekly earnings​ (w) in a given location against employment in the same location​ (EL) and employment in the same location and the same industry​ (ELI). Preliminary data analysis had shown that these variables are nonlinearly​ related, so natural logarithms​ (ln) were taken before running the regression. The resulting model is given below.

ln(w)=5.525+0.0260×ln(EL)+0.0110×ln(ELI)

The​ P-values associated with the intercept and the two coefficients in the above equation are 0.6680, <0.001, and 0.123. The​ F-ratio has a​ P-value of 0.1160.

c) Suppose there was a 6​% in EL in a specific​ location, but ELI remained constant. By what percentage would you expect weekly earnings to increase in that​ location?

Weekly earnings would be expected to increase by _____.

Answer 1

Answer:

Weekly earnings would be expected to increase by 0.156%

Explanation:

The regression equation is defined as,

ELI is made constant and the EL increased by 6%,

Differentiating both sides with respect to EL.

hence,

Given:

Now,