You need to use the attached data set. The data is from the 1979 CPS.
1. Compile a regression table with each of the following regressions:1
(a) wage = β0 + β1education + β2age + β3female + β4hours + e
(b) lwage = β0 + β1education + β2age + β3female + β4hours + e
(c) wage = β0 + β1education + β2age + β3female + β4hours + β5age2 + β6female ∗ education + e2
(d) lwage = β0 + β1education + β2age + β3female + β4hours + β5age2 + β6female ∗ education + e
2. Choose the best specification from number 1, citing each of our 4 criteria in specification searches.
3. Interpret β1 in equations a and b.
4. Interpret β0, β3, β1, and β6 in equation d.
5. Use a t-test to test if men and women have the same returns to education.
6. Are returns to age increasing, decreasing, or constant? Explain your answer.
7. There are no controls for ability here. How might this effect our regression results?
1Use the estout commands to make tables
2type gen femed=femael*education to generate the new variable
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