In estimating the effect of a difference in earnings for ivy league graduates, non-ivy league college graduates, and non-college graduates the following regression is run: Earningsi = β0 + β1IvyLeaguei + β2NonIvyCollegeGraduatei + Ui. What does the coefficient β1 represent?
A) The additional increase (decrease) in earnings from going from graduating college to graduating from an Ivy league school.
B) The average earnings of an Ivy league graduate.
C) The additional increase (decrease) in earnings from going from no college degree to an Ivy league degree.
D) The average earnings of an ivy league graduate conditional on graduating from any college.
Correct Answer:
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