QUESTION

2. A single dummy independent variable: Interpreting dummy variables Suppose that information about gender is coded as "1" if the person is female, and "0" otherwise. Consider the following simple model of hourly wage determination: wage = β0+δ0female+β1educ+u, educ stands for years of schooling. Which of the following pertains to the meaning of δ0 ? (Hint: Assume that there is the same amount of education and no omitted variables that are correlated with gender.) Check all that apply. If δ0<0 , then given the same level of education for men and women, women earn less than men on average. If δ0<0 , then given the same level of education for men and women, women earn more than men on average. δ0 reflects the wage difference based on level of education only. δ0 determines whether there is wage discrimination against women.

Public Answer

BVFHD1 The First Answerer