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ECONOMICS 321

Final Assignment Due December 9^th 12:00PM

Worth 39 points

The goal of this assignment is to test some of the assumptions of our regression model. You have developed the skills to run and analyze a regression in excel, now you will get some practice in testing for violations in homoskedasticity, exogeneity of the independent regressors, each individual must submit their own assignment written in their own writing (i.e., no copying other people’s assignments). If you work with someone else, write a note at the top of your assignment saying who worked together. Answers that are not explained in proper sentences will only receive part marks.  Data attached.

1. (3 points) What is the mean level of Wage in this sample? Number of Observations in the sample?

2.  (3 points) The variable recording the individual’s marital status is MARR. What percentage of individuals surveyed are in the Married group?

3. (3 points) What is the correlation between EXPEPERIENCE and WAGE? (in any cell put the   “=carrel(first variable, second variable) “

Correlation between Education and experience?

4. (3 points) 1- Run The regression of wage on education only.

(3 points) 2-Run the regression of wage on education and experience only.

(3 points) 3-Run the regression of wage on education, experience, age.

Please copy past your regressions

(3 points) Do we get an indication that our estimates of education without EXP were biased? If so, in which direction? And why is that? (Compering 1 and 2) (compere 1 and 3)

5. (9 points) Run The regression including the dummies sex and Marr? Please explain the coefficients of the dummy variables. When does dummy variable trap happen?

Please copy past your regression

6. (9 points) Perform both a Chow test and do a group F-test. Show your output and calculations/conclusions corresponding to BOTH tests. Explain why you get the same results.

And then compare the RSS from pooled regression and separate regressions. Calculate F statistics:

Taking the numbers from the regressions we get: