## Transcribed Text

1. What the properties necessary for OLStobethe Best Linear Unbiased
Estimator? (List and describe)
2.
Table shows summary statistics for subsample of the 2014 CPS Useto
answer the following questions:
(a) What percent of the sample Female?
(b) What percent of the sample lists race as American Indian?
(c) How many people the sample list noed to round
it off.)
3.
Table shows regression results from an equation where trage, the
dependent variable. Each column has slightly different independent variables.
Use the table to answer the following questions
(a) Interpret the coefficient on years of schooling in column 4.
(b) Interpret the coefficient on fornale in column
(c) Whv the coefficient on female different column?
(d) Write out the estimated equation in column (Write the numbers in for
the B's.)
(e) Use the estimated equation in column predict the wages for man
with
12
years
education
and a
woman
with
years education
(f) What racial group the reference (or omitted group) in columns 3and 43
(g) Interpret the coefficient on race in column 3.
4. Use the attached data set to complete the following tasks:
(a) Write down an equation for estimating income function of age, high-
est grade completed gender. race. and parent's income during adolescents
(b) Which coefficient describes the difference in wages by gender? What sign do
ou expect find?
(c) Estimate equation and report the results in table similar to table 2
(Include the n° your table. The STATA help section shows how to make
the table.)
(d) Interpret the coefficient on highest grade completed
(e) What the R² and what does tell us about the regression?
(f) Give prediction of wage for 30 year old Hispanic worman with 14 grades
completed whose household income was $40,000 whenshe was an adolescent
1
Stata Help
The command torun an OLS in stata "regress" or "reg" for short. Fol
lowing command should be list with the dependent variable
Soif
want
estimate
Stata
will
return
something
like figure 2 that example. 947394. We will learn what
the other numbers mean later point.
1.1
Making Regression Table
1. Make sure the estout package installed
2. Run regressions: "reg: xl x2x3"
3. store results estato rl
4.
Make table: esttab using tl.rtf. replace label star(* 0.10 ** 0.05 *** 0.01)
se
r2 ar2
Table Summary Stats 2014 CPS Data
(1)
Earnings hour
22.65
(13.90)
Number own children 18
0.749
(1.140)
Fernale
0.503
(0.500)
Male
0.497
(0.500)
Years Schooling
13.83
(2.828)
Enrolled School
0.0578
(0.234)
Age
41.60
(10.76)
race: White
0.811
(0.392)
Black
0.107
(0.309)
American Indian
0.0100
(0.0996)
Asian Pacific Islands
0.0584
(0.235)
Other
0.0142
(0.118)
Observations
1199
mean coeflicients; sd it parentheses
Table Wage Regressions on 2014 CPS Data
(2)
(3)
(4)
Wage
Wage
Wage
Wage
Fernale
-1.691°
-2.745***
-2.328**
-2.238***
(0.976) (0.882) (0.862) (0.863)
Years Schooling
2.197***
2.222***
2.198***
(0.160)
(0.157)
(0.157)
Age
0.249*** 0.229***
(0.0405) (0.0420)
race: White
-6.560*
-6.857**
(3.417)
(3.417)
e==Black
10.45***
10,51***
(3.645)
(3.640)
American Indian
-14.41**
-14.16**
(6.017)
(6.010)
Asian/Pacific Islands
-7,099*
7,636**
(3.768)
(3.775)
Other
1.604*
(0.906)
Constant
23.45*** -6.923** -10.77** -10.26**
(0.671)
(2.294)
(4.309)
(4.313)
812
812
812
812

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1. What are the properties necessary for OLS to be the Best Linear Unbiased Estimator? (List and describe)

If all Gauss-Markov assumptions are met than the OLS estimators alpha and beta are BLUE – best linear unbiased estimators:

best: variance of the OLS estimator is minimal, smaller than the variance of any other estimator

linear: if the relationship is not linear – OLS is not applicable.

unbiased: the expected values of the estimated beta and alpha equal the true values describing the relationship between x and y.

2. Table 1 shows summary statistics for a subsample of the 2014 CPS. Use to answer the following questions:

(a) What percent of the sample is Female? 50.3%

(b) What percent of the sample lists race as American Indian? %1

(c) How many people in the sample list race as other? (You may need to round it off. ) 0.0142*1199=17.03

It shows 17 people list race as other....