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2016 - 2017 Exam

The document is an exam paper from Maynooth University's Department of Economics, Finance, and Accounting for the EC605D course, consisting of four questions with varying weightings. Questions cover topics such as labor market statistics, correlation in exam components, matrix operations, and determinants of earnings using OLS regression analysis. Students are required to analyze data, interpret statistical results, and perform hypothesis testing within a time limit of 1 hour and 40 minutes.

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Orlando Penicela Júnior
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4 views3 pages

2016 - 2017 Exam

The document is an exam paper from Maynooth University's Department of Economics, Finance, and Accounting for the EC605D course, consisting of four questions with varying weightings. Questions cover topics such as labor market statistics, correlation in exam components, matrix operations, and determinants of earnings using OLS regression analysis. Students are required to analyze data, interpret statistical results, and perform hypothesis testing within a time limit of 1 hour and 40 minutes.

Uploaded by

Orlando Penicela Júnior
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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MAYNOOTH UNIVERSITY

DEPT OF ECONOMICS FINANCE AND ACCOUNTING

EC605D Final Exam 2016/17

Answer all questions.

Q1 is worth 25%. Question 2 is worth 15% Question 3 is worth 15%. Question 4 is


worth 45%
Please turn off and hand up your phone and any other communication device.
Time: 1 hour and 40 minutes.

1. The Central Statistics Office in Ireland produces Labour Market statistics for
individuals aged 15 and over in Ireland. In Quarter 2, 2016, there were 3637.7
(thousand) individuals in total. These, individuals are classified according to gender
(G) and Labour Market status (S). For labour market status, people fall into one of
three categories; Employed (EM), Unemployed(UN) or Not in the Labour Force
(NL). The table below shows the joint distribution of gender (G) and Labour Market
Status(S) for Quarter 2 2016.

Gend Labour Market


er (G) Status (S)
EM UN NL
0.3 0.0 0.1
M 0 3 6
0.2 0.0 0.2
F 5 2 4

a) Write down the marginal distribution for G and S (fs(S) and fG(G)) and comment on
each of these marginal distributions.
b) Find the conditional distributions f(S|G=M), f(S|G=F). How do these compare with
the marginal distribution fs(S) .How would you explain your results?

c) The labour force is defined as the number of people unemployed plus the number of
people employed. The unemployment rate is the defined as the number of people
unemployed/number of people in the labour force. Using this information, calculate

1
the overall unemployment rate, the unemployment rate for males and the
unemployment rate for females. Comment on your results.
.

2. Suppose an exam consists of an oral(R) and a written(W) component and R and W are
correlated. Assume that E ( R )=μ R ∧Var ( R )=σ 2R , E ( W ) =μ W ∧Var ( W )=σ 2W .
Let us assume that the total score T=0.5R+0.5W.

(a) Find an expression for E(T) in terms of μ R and μW .


(b) Prove thatVar ( T ) =0.25 σ 2R +0.25 σ 2W + 0.5 Cov(R , W ) .

Where Cov(R,W) is the Covariance between R and W.

[ ] []
1 X 12 y1
3.Suppose the matrix X = 1 X 22 , the vector
1 X 32
y=
β
y 2 and the vector β= 1
y3
β2 []
3
Show that ( y− Xβ ) ( y− Xβ ) =∑ ( y i−β 1−β 2 X i 2)
' 2

i=1

4. Suppose a researcher is interested in the determinants of earnings. In particular, she


estimates by OLS the parameters in the equation below
LNWAGE=β 1+ β 2 FE+ β3 ED + β 4 EX+ β 5 EXSQ+ β 5∪+ ε
LNWAGE Ln(Wage)
FE=1 if female, 0 otherwise
ED = Years of education
EX = years of labour market experience
EXSQ = EX2 ( Experience squared)
UNION=1 if individual is a trade union member, 0 otherwise
The results are shown below

2
. regress LNWAGE FE ED EX EXSQ UNION

Source SS df MS Number of obs = 550


F(5, 544) = 67.61
Model 50.550569 5 10.1101138 Prob > F = 0.0000
Residual 81.3488085 544 .149538251 R-squared = 0.3833
Adj R-squared = 0.3776
Total 131.899377 549 .240253875 Root MSE = .3867

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

FE -.3155108 .0344658 -9.15 0.000 -.3832133 -.2478084


ED .0768148 .0064769 11.86 0.000 .0640919 .0895377
EX .0249177 .0047125 5.29 0.000 .0156608 .0341747
EXSQ -.0002844 .0001015 -2.80 0.005 -.0004838 -.000085
UNION .2039824 .036864 5.53 0.000 .1315692 .2763957
_cons .458257 .0957004 4.79 0.000 .2702694 .6462445

a) Interpret the coefficients on FE, ED,UNION and the experience variables (EX and
EXSQ). Comment on the sign, magnitude and statistical significance.
b) Predict earnings for a female trade union member with 12 years of schooling, 10
years of experience.
c) Using a 10% level of significance, test the following for the coefficient on ED

H0:β3=0.10: HA:β3≠0.10 . Interpret your results.


d) Suppose you wanted to test whether the effect of being a Union member ( on
earnings) varied by gender, how would you do this? Be specific about the steps.

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