Your textbook discussed the regression model when X is a binary variable
Y_i = ?₀ + ?₁D_i + u_i, i = 1..., n
Let Y represent wages, and let D be one for females, and 0 for males. Using the OLS formula for the slope coefficient, prove that $\hat{\beta}_ { 1 }$ is the difference between the average wage for males and the average wage for females.

Question

Your textbook discussed the regression model when X is a binary variable
Y_i = ?₀ + ?₁D_i + u_i, i = 1..., n
Let Y represent wages, and let D be one for females, and 0 for males. Using the OLS formula for the slope coefficient, prove that

\hat{\beta}_ { 1 }

is the difference between the average wage for males and the average wage for females.

Quizplus · Accepted Answer

The Answer of Your textbook discussed the regression model when X is a binary variable Y_i = ?₀ + ?₁D_i + u_i, i = 1..., n Let Y represent wages, and let D be one for females, and 0 for males. Using the OLS formula for the slope coefficient, prove that $\hat{\beta}_ { 1 }$ is the difference between the average wage for males and the average wage for females.

Your Textbook Discussed the Regression Model When X Is a Binary