FOR MORE HIGH-QUALITY PAST PAPER MODEL ANSWERS, ONLINE TUTORING AND
ECONOMICS HELP, visit LondonEconomicsTutors.co.uk.
Discounted prices compared to all other websites
ECN225 Econometrics 2 – 2018
Questions and Answers
Question 1
a) The coefficient 𝛽 is the average hourly earnings (in dollars per hour) of all individuals who do not
have a college degree, which in this case is 7.98. The coefficient 𝛽 is the difference in average wages
for those who do have a college degree compared to those who do not. Therefore the average wage
for those who do have a college degree is 7.98 + 6.21 = 14.19 dollars per hour.
b) To determine whether the difference between the wage earnt by college educated workers and
the wage earnt by other workers is statistically different, we perform the following two-sided
hypothesis test:
𝐻 :𝛽 = 0
𝐻 :𝛽 ≠ 0
ECONOMICS HELP, visit LondonEconomicsTutors.co.uk.
Discounted prices compared to all other websites
ECN225 Econometrics 2 – 2018
Questions and Answers
Question 1
a) The coefficient 𝛽 is the average hourly earnings (in dollars per hour) of all individuals who do not
have a college degree, which in this case is 7.98. The coefficient 𝛽 is the difference in average wages
for those who do have a college degree compared to those who do not. Therefore the average wage
for those who do have a college degree is 7.98 + 6.21 = 14.19 dollars per hour.
b) To determine whether the difference between the wage earnt by college educated workers and
the wage earnt by other workers is statistically different, we perform the following two-sided
hypothesis test:
𝐻 :𝛽 = 0
𝐻 :𝛽 ≠ 0
