Applied Econometrics
Homework#1
Question 2
a. Chart, scatter chart Description automatically generated
b. Table Description automatically generated
The estimated intercept is 4.62605. The estimated slope is 0.5118171.
AHE = 4.62605 + 0.5118171 * Age
Since age increases by 1. AHE increases by 0.5118171.
c. Mary
Age = 26
AHE = 4.62605+0.5118171*26=17.93
Patrick
Age = 30
AHE = 4.62605+0.5118171*30=19.98
d. Age does not account for a large fraction of the variance in earnings across individuals because R-squared=0.0185 which means it only has 1.85% effect to the average hourly earnings.
e.
f.