Does experience increase a person's wage in the United States?
Open the Excel workbook, CPS90ExpWorkers.xls. The Intro sheet explains the variables.
1. Report the average wage for Experienced and Inexperienced workers.
2. The difference between the average wage of the Experienced workers and the average wage of the Inexperienced workers is $3.10 per hour. Why can we not conclude that experience raises a person's wage based on this fact?
3. Draw a two box model that represents the data generation process.
4. State the null and alternative hypotheses.
5. Find the SE of the difference of the sample averages. Show your work.
6. On the assumption that the null is true, draw a rough sketch of the sampling distribution of the difference of the sample averages. Mark the location of the $3.10 per hour difference we observed in our sample.
7. Would you reject the null hypothesis? Explain.