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Group 11 SB - Assignment 2

The document analyzes wage data to test for discrimination. It finds significant differences in wages between males and females, and among racial groups. A regression model shows education, age, tenure and race are significant predictors of wages, explaining about 13% of variation. On average, whites earn $5.74 more than blacks.

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17 views5 pages

Group 11 SB - Assignment 2

The document analyzes wage data to test for discrimination. It finds significant differences in wages between males and females, and among racial groups. A regression model shows education, age, tenure and race are significant predictors of wages, explaining about 13% of variation. On average, whites earn $5.74 more than blacks.

Uploaded by

trieuthuan101
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Question 1:

a.Test whether there is a discrimination on wage between male and female? Show your
test and explain the result.
H0: There is no difference in wages between male and female employees.
H1: There is a difference in wages between male and female employees.

1.

From the result of the T-test, it can be seen that the p-value is less than the significance level
(<0.05).
Therefore, we reject the null hypothesis and conclude that there is a difference between males
and females wages.
b.Test whether there are discriminations on wage between white, black and others?
Show your test and explain the result. Please also do tests on assumptions.
H0: There is no difference between wages among the racial groups (white, black and others).
H1: There is a difference between wages among the racial groups (white, black and others).

From the result of the ANOVA test, it can be seen that the p-value is less than the
significance level (<0.05).
Therefore, we reject the null hypothesis and conclude that there is a difference in wages
among the racial groups (white, black and others).
c. Make a regression of wage on edu, tenure, race, male and age. Show your results and
comment on the estimated coefficients:
Do Tests for significance of each slope;
What percent do the independent variables explain variation in dependent variable?

Looking at the results, we can assume that:


On average, each additional year of education is associated with a $0,258 increase in wage,
holding other variables constant.
On average, each additional year of age is associated with a $0.141 increase in wage, holding
other variables constant.
On average, each additional year of employment is associated with a $0.046 increase in
wage, holding other variables constant.
On average, females earn $0,144 more than males, holding other variables constant.
On average, individuals from other racial groups earn $0,43 more than white individuals,
holding other variables constant.

*Test for significance of each slope

H0: Each slope (coefficient) in the regression model is equal to zero, indicating that there is
no relationship between the corresponding independent variable and the dependent variable
(wage).
H1: At least one slope (coefficient) in the regression model is not equal to zero, indicating
that there is a relationship between the corresponding independent variable and the dependent
variable (wage).
Since the p-values associated with all coefficients are less than the significance level (0.05),
we reject the null hypothesis. This implies that all coefficients in the regression model are
statistically significant, indicating that there is a relationship between each independent
variable and the dependent variable (wage).
Because the R-squared value is 0.126, it means that the independent variables explain 12.6%
of the variance in the dependent variable (wage), while the remaining 87.4% of the variance
is unexplained by the model.
d.How much is the white's wage more/less than one of the black on average?

According to the T-test, the mean difference equals 5.7410626. That is, on average, white
individuals’ wage is approximately $5.74 more than the black individuals’ wage.

e.Can you predict the wage of a person who is female with age of 40, tenure = 6, and she is
white and the highest education level she obtained is bachelor.
yi = β0 + β1 xi + εi
Y= -8.145+(-5.569)*male +0.273 *age +0.115*tenure +1.990 *edu + (-1.272)*race
= -8.145+(-5.569)*1 +0.273*40 + 0.115* 6+1.990*16+ (-1.272)*1
= 28.464 USD/hour

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