PLEASE ANSWER ALL PART A TO E
Part 4: Longer Answers (25 points total, 5 bonus points) Consider the following model: Ln(wage), – 4.116 +0.153educ – 0.004 educ +0.0038IQ (0.536) (0.074) (0.0026) (0.001) + 0.023exper; -0.0004erper + 0.0135age (0.013) (0.0006) (0.005) +0.1858marri – 0.228black, + 0.0966(marry x black;) (0.044) (0.90) (0.007) – 0.0856south: + 0.177 urban, (0.028) (0.027) Ln(wage) is the natural log of an observation's monthly earnings edue is the number of years of education an observation has. IQ is the value of an observation's IQ score. exper is the number of years of experience in the work force, age is the observation's age. marr is a dummy variable which equals to 1 if the observation is married and equals to 0 if sin arried and equals to O if single. black is a dummy variable if the observation is black and equals to 0 otherwise. south is a dup d equals to O otherwise. south is a dummy variable which equals to 1 if the observation lives in the South and equals to O otherwise. urban is a dummy variable which equals to 1 if the observation lives in an urban area and equals to otherwise. (a) What is the marginal effect of completing a college education? More specifically, what is the effect on monthly earnings when the educ variable goes from 12 to 167 You should report your result in a fully formatted sentence. (5 points). (b) What is the null hypothesis for the test of whether IQ has any effect on monthly earnings? Perform the hypothesis test if possible. (5 points). (c) Compute the turning point for years of experience. (6 points). (d) Interpret, in a fully formatted sentence, the meaning of the 0.177 coefficient of the urban vari- able. (5 points) (e) Compare to single black people in the sample, do married black people earn more (or less)? By how much? (5 points).