1 Problem 1 (10 points)Using 528 observations from the CPS dataset, log(waze) was regressed on exper, exper’, and edu to obtain the following results (standard errors below are robust to heteroscedasticty) OALT + 0.042 =O. 7+ 0.004edu +i where exper is experience in years and edu is years of schooling (a) Suppose we believe that wages and experience have a linear relationship. How would you test this hypothesis (formally state the null and altemative hypothesis) (b) Perform the test that you suggest in part (a) at the 5% level of significance, nis) The effect of childzen on how much marvied women choose to work is important ‘The following model is proposed to be estimated using data on married females: hours = 39 + Sykids + w ‘where hours is hours worked per year, kids is the number of children under the age of 13 and w is an ‘mobyervel term that captures preferences for work. (a) What is the imerpretation of 3p and 3,? (b) What assumption(s) must yost male to ensure that this model has a cansal interpretation? (c) Empirical evidence suggests that women who have a strong commitment to their career oF enjey working in the labor market tend to work more hours and have fewer children, Does your answer Jn (b) eontinue to hold in light of this evidence? Explain briefly. 3, Problem 3 (15 points) The following repression was estimated using 706 observations to study the tade-off between time spent sleeping and working and to look at other tactors affecting sleep) sleep = 9638.25 ~ 0.148tolwrk ~ 11.18edu-+ 2.20age +@ Pe Ciast) ni Baye cane ‘Sum of Squared Error (Residual) = 123455007 where sleep and toteork (total work) are 3s per week and edi and age ave in years (a) Is either edu or age individually significant at the 5% level against a two sided alternative?(©) Dropping eds and age from the equation girs sleep = 359638 — 0 83t0turk + 9 eer = SESS Sum of Squaced Favor (Residual) = 124858119, ‘Are ed and age folly sgnlfcat inthe onlaaal equation atte 6% leva? (6) Compare your scawers to (a) and (8). Do they mabe sense together? Explain brief 4. Probom 4 (20 points) The folowing model wa estimated to examine whether earings are InDucncod ‘yy maial tas ‘Here wage denotes hourly wage and rarvied isthe ariage duty. tog(uage () Taxrpret tho eoffsant on married. (©) Is the ceticint on married statistically diferent ftom sro at 5% level of siguicance? (6) sit reasonable to believe that this mode ha a const interpretation? Explain. (4) Use the informatio given show to ota the etzated model when lo(wage) rere on = coustant and unmertied the dummy for aot being mate. (6) Would be snsbletorun a regreston wth both marie and unmarried as explanatory variables? Explain bel