Question: [18 Marks]

Use the data "sample_midterm_q4.dat" to estimate the following wage equation

\(\ln \left( WAGE \right)={{\beta }_{1}}+{{\beta }_{2}}EDU+{{\beta }_{3}}EXPER+{{\beta }_{4}}HRSWK+\varepsilon \), where

WAGE = earnings per hour

EDU = years of education

EXPER= post education years experience

HRSWK= usual hours worked per week

1. Report the results and interpret the estimated coefficients.
2. Test the hypothesis that an extra year of education increases the wage rate by 10% against the alternative that it is less than 10%. Test at 5% level of significance.
3. Find a 90% interval estimate for the percentage increase in wage from working an additional hour per week.
4. Examine the joint significance of education and experience at 1% level of significance. Clearly present the restricted model.
5. Test at 5% level of significance that years of experience and usual hours worked per week have the same effect on wage at 5% level of significance. Clearly present the restricted model.

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