ECN224 Econometrics 1 - 2019 Past Paper Questions and Answers

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ECN224 Econometrics 1 – 2019
Questions and Answers

, FOR MORE HIGH-QUALITY PAST PAPER MODEL ANSWERS, ONLINE TUTORING AND
ECONOMICS HELP, visit LondonEconomicsTutors.co.uk.
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(a)

The slope coefficient indicates that the impact of having at least one child compared to having no
children on the number of hours worked is a reduction in the hours worked by 6.5 hours, on average
and all else being held constant.

The constant indicates that when children is equal to 0 (i.e. the individual does not have any
children) the average number of hours worked is 33.11.

To determine whether the difference between the coefficient on children is statistically significant,
we perform the following two-sided hypothesis test:

𝐻 :𝛽 = 0
𝐻 :𝛽 ≠ 0
The test statistic is:

𝛽
𝑡 =
𝑆𝐸(𝛽 )
Plugging in the values from the regression output:
−6.493
𝑡 = = −24.59
0.264
We then compare the value of the t-statistic to the associated critical values. Here, we can reject the
null at a 5% significance level if the absolute value of the t-statistic is significantly greater than 1.96.
In this case, the t statistic is significantly greater than 1.96, and therefore we can reject the null