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Assignment -Group 3

The document outlines a practical assignment for econometrics focused on analyzing average hourly earnings based on various factors such as education, experience, gender, marital status, and tenure. It includes regression analysis results, tests for multicollinearity, heteroskedasticity, and omitted variable bias, along with specific tasks for students to complete. The assignment is graded on a total of 50%, with emphasis on presentation and content.

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2 views

Assignment -Group 3

The document outlines a practical assignment for econometrics focused on analyzing average hourly earnings based on various factors such as education, experience, gender, marital status, and tenure. It includes regression analysis results, tests for multicollinearity, heteroskedasticity, and omitted variable bias, along with specific tasks for students to complete. The assignment is graded on a total of 50%, with emphasis on presentation and content.

Uploaded by

a32318721
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Practical Assignment for Econometrics

Mark = 50 %( 20% presentation + 30% content of the assignment); Instructor: Eshetu S. (PhD)

Given: Average hourly earnings =(years of experience, years of education, gender 1 if female,
marital status 1 if married, years with current employer =tenure)___________Group 3

reg wage educ exper female married tenure

Source | SS df MS Number of obs = 526

-------------+---------------------------------- F(5, 520) = 60.61

Model | 2636.38356 5 527.276713 Prob > F = 0.0000

Residual | 4524.03073 520 8.70005909 R-squared = 0.3682

-------------+---------------------------------- Adj R-squared = 0.3621

Total | 7160.41429 525 13.6388844 Root MSE = 2.9496

------------------------------------------------------------------------------

wage | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

educ | .5556838 .0498647 11.14 0.000 .4577228 .6536447

exper | .0187449 .0120289 1.56 0.120 -.0048863 .0423762

female | -1.741397 .2664871 -6.53 0.000 -2.264921 -1.217873

married | .5592403 .2859483 1.96 0.051 -.0025156 1.120996

tenure | .1387816 .0211351 6.57 0.000 .0972608 .1803024

_cons | -1.618152 .7230508 -2.24 0.026 -3.038611 -.197692

vif

Variable | VIF 1/VIF

-------------+----------------------

exper | 1.61 0.621744

tenure | 1.41 0.710790

married | 1.18 0.849016

educ | 1.15 0.869209

female | 1.07 0.933264

-------------+----------------------

Mean VIF | 1.28


hettest

Breusch-Pagan / Cook-Weisberg test for heteroskedasticity

Ho: Constant variance

Variables: fitted values of wage

chi2(1) = 139.71

Prob > chi2 = 0.0000

ovtest

Ramsey RESET test using powers of the fitted values of wage

Ho: model has no omitted variables

F(3, 517) = 10.17

Prob > F = 0.0000

Tasks:

1. Checking model fit


2. Checking the significance of individual variables (using t-test)
3. Check Multicollinearity
4. Check Heteroscedasticity
5. Check Omission of important variables
6. 7. Interpret the significant variables after solving problems (heto, multi and omission) if any

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