a) Estimate the model
log( wage )=ß0+ ß1educ+ß2 exper +ß3tenure+ß4married +ß5 black+ß6south+ß 7 urban+u
and report the results in the usual from. Holding other factors fixed, what is the approximate difference in the monthly salary between blacks and non-blacks? Is this difference statistically significant?
b) Add the variable exper2 and tenure2 to the equation and show that they are jointly insignificant at even the 20% level.
c) Extend the original model to allow the return to education to depend on race and test whether the return on education does depend on race.
d) Again, start with the original model, but now allow wages to differ across four groups of people: married and black, married and non-black, single and black, and single and non-black. What is the estimated wage differential between married blacks and married non-blacks?