pertment ofS 9 Applied St isties .¢ (WM-ASDS), Spring 2023, sties anf Quiz #2 Course Code: WM-ASDS 08 Course Title: Applied Regression Analysis Total marks: 10 (3+3+4) Time: 45 Minutes 1.13] Consider the regression model: y (Monthly earnings ($)) = Bo * Br rytPersons 1Q) + Bs x{Knowledge) + Bs x3(Education (years)) + Bx x xe(Tenuor) Be xe(Race) * B- x-(South) + /¥s xe(Place) + rience (years) + Bs 1 Black _ 1 South = 1 Urban © 0 white °= © 0 other 77 £0 Rural ge about the job cars at current job, Knowledge = a measure of knowle and Out Write down the best fitted regression line. Interpret the marginal effect of each variable (2 [3] Re-consider the model of QI with interaction: y (Monthly earnings) = Bo + Bi xi(Person's 1Q) + Bz x:(Knowledge) + 8 x3(Education) + By xa(Experiance) + Bs xs(Tenuor) + Bs xs(Race) + B> xx(South) + By xs(Place) + Bo x3.ce(Education * Race) + € ‘The regression output of the model is given in output #2 a) Comment on the significance of interaction term +) What is the marginal effect on eamings of non-black (White) people for an additional year of education? =) What is the marginal effect on camings of black people for an additional year of education()3,{4] Re-consider the mods y (Monthly earnings) Bu + fv xtPer Ba ed xperian fi x(Place) and output #3 the difference in average carmin in the Non-Southern place aye earnings wy) What i who live What is the difference in aver who live in the South What is the difference in average earning urban workers 1) What is the dil rural workers’ ference in average earning Output # | J of Q) with interact as IQ) + Bp xKnowledge) * perttenuor +P fixe exs(South + Urbat xidl ducatior (Race) + Be xe (Seuth of urban and rural work of urban and rural worke of Southern and Nen-Souther of Southern and Non-South alue PROID,oO tatamate Si , 408.154 pat vot vate PeO THD vty a aaaded v9.0 Vang aan a pana Yearstaperience aot a © eo yi 2a ape sod B08 sat 11280 sort vray a 2snatt L408 ans o.ode 0 dasMack 82.080 date O08 aged? codans 0TH CGAL TAT GIOTTO heat gesicval standard enron: 169.9 on 65Y degrees of treedow nartaple Resquared: 0.227, Adjusted Raat Ne qoristic: 222 00 9 and 089 OF, P te Outpuc 3 Estimate Std. feror t value PPOLLD intercept) $38,952 GMT 02 o,o00n10 9 Sage 1.224 2,686 0.00/40 * Knowledge game badd 2.87 0.000278 Years go7ss 86854, T8T 1.080 7 FF veertaperience 12011 2985, 3.516 0, 000408 7° Tenure 4 2,950 1.240 0.219344 Black -105 55.487 1.909 0.00702 South 3a, 65.085 0.034 0,526234 “urban aasco7s 39.922 5.307 Le OF CootnsUeban “104,974 65.652 15599 0.11011 signif, codes: 0 *7#" 0,002 "9" 0,01 11 O08 1." Od