Considering Y M = 40, 000 and Y F = 28, 000, Y M and Y F are average earnings for males and females respectively. The following are estimated simple human capital earning functions: ln Y M = 9.2 + 0.1S M , S M = 14; ln Y F = 9.4 + 0.07SF; S F = 12; S M and S F are average school years for male and female respectively.
-What is female and male wage ratio in logarithms?

Question

Quizplus · Accepted Answer

The male wage in logarithms is calculated as ln(40,000) = 9.2 + 0.1*14. The female wage in logarithms is ln(28,000) = 9.4 + 0.07*12. To find the ratio, subtract the female wage logarithm from the male wage logarithm. The difference, not the ratio, between these two gives a positive value, indicating the percentage by which male wages in logarithms are higher than female wages, hence option C is correct.

Considering YM = 40, 000 and YF = 28, 000

Considering Y^M = 40, 000 and Y^F = 28, 000