Assignment:
Question - Population Survey
Each month the Bureau of Labor Statistics in the U.S. Department of Labor conducts the "Current Population Survey" (CPS), which provides data on labor force characteristics of the population, including the level of employment, unemployment, and earnings. Approximately 65,000 randomly selected U.S. households are surveyed each month. The sample is chosen by randomly selecting addresses from a database comprised of addresses from the most recent decennial census augmented with data on new housing units constructed after the last census. The exact random sampling scheme is rather complicated (first small geographical areas are randomly selected, then housing units within these areas randomly selected). The file Assignment Data.xlsx, tab: Population Survey contains the data from the survey.
These data are for full-time workers, defined as workers employed more than 35 hours per week for at least 48 weeks in the previous year. Data are provided for workers whose highest educational achievement is (1) a high school diploma, and (2) a bachelor's degree. Series in
Data Set:
AHE: Average Hourly Earnings
BACHELOR: 1 if worker has a bachelor's degree; 0 if worker has a high school degree
FEMALE: 1 if female; 0 if male
AGE: workers age
Use the data in Assignment Data.xlsx, tab: Population Survey to answer the following questions:
D1. Run a regression of average hourly earnings (AHE) on age (Age). Report Excel/Matlab output. What is the estimated effect of Age on earnings? If Age increases from 25 to 26, how are earnings expected to change? If Age increases from 33 to 34, how are earnings expected to change?
D2. Run a regression of AHE on Age, gender (Female), and education (Bachelor). Report Excel/Matlab output. What is the estimated effect of Age on earnings? Construct a 95% confidence interval for the coefficient on Age in the regression.
D3. Are the results from the regression in D2 substantively different from the results in D1 regarding the effects of Age and AHE? What bias does the regression in D1 appear to suffer from?
D4. Bob is a 26-year-old male worker with a high school diploma. Predict Bob earnings using the estimated regression in D2. Alexis is a 30-year-old female worker with a college degree. Predict Alexis earnings using the regression.
D5.Compare the fit of the regression in D1 and D2 using the regression standard errors,