SOLUTION: Regression analysis A researcher wants to investigate the relationship between schooling (years of education) and wages (1000 USD). The aim is to find out the “ret

Question 1183598: Regression analysis

A researcher wants to investigate the relationship between schooling (years of education) and wages (1000 USD). The aim is to find out the “return to education”. To be able to investigate this, the researcher collects data among workers and decides to conduct a regression analysis. Additional independent variables are years of working experience (“Experience”), years of working experience-squared (“Experience-sq”), and a dummy variable for the race (if the worker is “Hispanic” then the dummy takes value 1 otherwise 0). She obtains the following regression results.

Coefficients
Constant:-0,532
Schooling: 0,057
Race dummy: -0,032
Experience: 0,066
Experience-squared: -0,002

1. What is the estimated regression equation? Write down and explain.
2. Interpret the coefficients with words.

Thank you very much for your time i really appreciate it!

Answer by robertb(5830) (Show Source): You can put this solution on YOUR website!
1. is your multiple regression equation.

2. This means that, every additional year of schooling increases wage by $57, and every additional year of experience increases wage by $66.
However, any unit increase in experience-squared brings a decrease of $2, and in general Hispanics earn $32 less than non-Hispanics.

The constant coefficient provides a baseline wage for an entry level job for a new graduate, i.e., without any years of experience and initially
graduate has no wages, and depending only on the number of years of education and Hispanicity. This means that, non-Hispanics will have to study
0.532/0.057 = 9.33 years to earn baseline wages, while Hispanics will have to study on average 0.564/0.057 = 9.9 years to reach same baseline wages.
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