The following equation has been used to estimate wages: ln ( Y ) = ln ( Y o ) + b 2 EDU + b 3 EXPER + b 4 EXPER 2 + e where Y is income, Y 0 is income of someone with no education or experience, EDU...


The following equation has been used to estimate wages:


ln (Y) = ln (Y
o) + b
2

EDU + b
3
EXPER + b
4

EXPER
2 +e


whereY is income,Y
0 is income of someone with no education or experience,EDU is years of education andEXPER is experience in the field.  If you suspect males earn higher wages than females and that the wage difference increases with education how would you adjust the econometric model to estimate wages?


OPTIONS -



a. include a binary variable for gender, MALE



b. include an interaction term equal to MALE* EDUC



c. include an indicator variable for MALE and one for FEMALE



d. include a binary variable for MALE and an interaction term equal to MALE * EDUC



Jun 06, 2022
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