Assignment:
Term paper information
Choose the project described below for your paper.
Try different speci?cations for your model, for example, you may want to try a double logarithmic model as well as a model in levels.
Consider including squares of variables, including interaction terms, or creating additional dummy variables if that should be a good idea.
Examine your dataset carefully; for example, perhaps you will want to delete observations that you think do not make sense. Try to be creative and critical. Try to do things like add extra regressors if that should be possible. Sometimes relationships between variables in your dataset are very unlikely to be linear. Multiple regressions are very often more informative than simple regressions for the reasons discussed. Be aware that your instructor will only be able to judge your work on what you hand in, and not on all the work you may have done but cannot be found back in your ?nal product. Also, take great care not to misinterpret output or draw conclusions that are veri?ably incorrect.
For reporting your regression results, follow the following format (example):.
WGE = 1234 + 56.3∗EXP - 901∗F + 341∗W - 344∗E - 861∗S
(231) (26) (540) (562) (668) (659) se in parentheses; R^2= 0.63, n = 1031
Do not include Gretl output in your paper.
If you can ?nd literature or references about the topic of your choice, mention these in the appropriate section; it will improve your paper's quality. Try dfferent model speci?cations, and try to work towards a "?nal model" if possible. Take care to choose a sensible model speci?cation; for example, do not use a regressor that is coded "1" for train, "2" for bus, "3" for airplane.
Low t-values can still make an interesting project. The point here is to do economic or social science style research; it is your job to objectively report what is suggested by the data. If you think there ought to be a relationship between y and x, but you don't ?nd one, then that is a perfectly ?ne outcome of a piece of research. Scienti?c research should ideally be free of biases, and reporting unbiased conclusions in a veri?able and correct way is what science should ideally be all about.
Your paper should not exceed four double-spaced typed pages. Your paper should be typed. The four-page limit is not there to make your life difficult, but instead, the upper limit serves to limit the amount of work that you can usefully spend on this project. The idea is for you to be precise and concise.
For your paper, use the following section format. You are explicitly allowed and encouraged to make minor changes to this format if you think this is appropriate; however, you need to subdivide your paper in sections.
1. Statement of the problem
2. Review of the literature
3. The data
4. The empirical results and conclusions
5. Possible extensions and limitations of your study
6. Acknowledgements (not always necessary)
7. References
Your paper should be self-contained as much as is reasonably possible. That is, the paper should be readable without prior knowledge of the dataset, and you should introduce any nonstandard symbols or notation. An Undergraduate Econometrics student from say, University of Indiana should be able to read your paper and make sense of it.
Project descriptions
Wages in Malaysia
Marcia Schafgans analyzed Malaysian wage data in an article titled "Ethnic Wage Dfferences in Malaysia: Parametric and Semiparametric
Estimation of the ChineseMalay Wage Gap". This article appeared in Journal of Applied Econometrics. At the internet location you will ?nd a description a data?le and a zipped data ?le. This data set contains wages and characteristics of 8748 people living in Malaysia of dfferent ethnicity (Malay, Indian, and Chinese). We are interested in analyzing wage discrimination in Malaysia, and casual conversations with Malaysian grad students suggest the potential presence of such discrimination. Examine the end of the data?le carefully - it looked to me as though there was an obsolete number at the end of this data?le.
For this project, regress the "LWAGE" variable on regressors and try to draw conclusions about ethnicity based wage dfferences in Malaysia.
There is a substantial literature in Labor Economics about the estimation of wage equations, and for this project it should not be too difficult to write a decent overview of the literature.