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Problem set 2
Instructions: Please write/type your answers and hand in a hard copy before class starts. The total points for this problem set is 50.
1. You are studying the causal effect of experience on wages (i.e. return to experience). ttl_exp is total work experience. You run the following model:
Wage=β0+β1ttl_exp+ β2age+ β3race+ β4south+ β5industry+ β6grade+ε
The Stata output shows:
a. Interpret the estimate for ttl_exp.
2. (Consistency and the notion of control) Use the same model: Wage=β0+β1ttl_exp+ β2age+ β3race+ β4south+ β5industry+ β6grade+ε
3. (Stata application)
Load the data nlsw_ps2.dta. Our research question is to examine whether being in the union affects one’s wage. For the following questions that requires STATA command, you can either paste the STATA output or write/type the key results.