Introduction to Econometrics 3rd Edition by James Stock, Mark Watson

Exercise 14

Read the box "The Return to Education and the Gender Gap" in Section 8.3.
a. Consider a man with 16 years of education and 2 years of experience who is from a western state. Use the results from column (4) of Table 8.1 and the method in Key Concept 8.1 to estimate the expected change in the logarithm of average hourly earnings ( AHE ) associated with an additional year of experience.
b. Repeat (a) assuming 10 years of experience.
c. Explain why the answers to (a) and (b) are different.
d. Is the difference in the answers to (a) and (b) statistically significant at the 5 % level Explain.
e. Would your answers to (a) through (d) change if the person were a woman If the person were from the South Explain.
f. How would you change the regression if you suspected that the effect of experience on earnings was different for men than for women