Assume that the following annual earnings (Y) equations were estimated separately for union (subscript U) and non-union (subscript N) workers. ED denotes years of education (averaging 14 for union workers and 16 for non-union workers), SEN denotes years of seniority with the company (averaging 12 for union workers and 10 for non-union workers).
Y U = 22,000 + 1000 ED U + 1000 SEN U
Y N = 8000 + 2000 ED N + 500 SEN N
-Based on 15-01, what is the total union-non union wage differential?

Question

Assume that the following annual earnings (Y) equations were estimated separately for union (subscript U) and non-union (subscript N) workers. ED denotes years of education (averaging 14 for union workers and 16 for non-union workers), SEN denotes years of seniority with the company (averaging 12 for union workers and 10 for non-union workers).
Y U = 22,000 + 1000 ED U + 1000 SEN U 
Y N = 8000 + 2000 ED N + 500 SEN N 
-Based on 15-01, what is the total union-non union wage differential?

Quizplus · Accepted Answer

The Answer is E

Assume That the Following Annual Earnings (Y) Equations Were Estimated