PARTTWOSolutionstoEmpiricalExercisesChapter3ReviewofStatisticsSolutionstoEmpiricalExercises1.(a)AverageHourlyEarnings,Nominal$’sMeanSE(Mean)95%ConfidenceIntervalAHE199211.630.06411.5011.75AHE200416.770.09816.5816.96DifferenceSE(Difference)95%ConfidenceIntervalAHE2004AHE19925.140.1174.915.37(b)AverageHourlyEarnings,Real$2004MeanSE(Mean)95%ConfidenceIntervalAHE199215.660.08615.4915.82AHE200416.770.09816.5816.96DifferenceSE(Difference)95%ConfidenceIntervalAHE2004AHE19921.110.1300.851.37(c)Theresultsfrompart(b)adjustforchangesinpurchasingpower.Theseresultsshouldbeused.(d)AverageHourlyEarningsin2004MeanSE(Mean)95%ConfidenceIntervalHighSchool13.810.10213.6114.01College20.310.15820.0020.62DifferenceSE(Difference)95%ConfidenceIntervalCollegeHighSchool6.500.1886.136.87SolutionstoEmpiricalExercisesinChapter3109(e)AverageHourlyEarningsin1992(in$2004)MeanSE(Mean)95%ConfidenceIntervalHighSchool13.480.09113.3013.65College19.070.14818.7819.36DifferenceSE(Difference)95%ConfidenceIntervalCollegeHighSchool5.590.1735.255.93(f)AverageHourlyEarningsin2004MeanSE(Mean)95%ConfidenceIntervalAHEHS,2004AHEHS,19920.330.1370.060.60AHECol,2004AHECol,19921.240.2170.821.66Col–HSGap(1992)5.590.1735.255.93Col–HSGap(2004)6.500.1886.136.87DifferenceSE(Difference)95%ConfidenceIntervalGap2004Gap19920.910.2560.411.41Wagesofhighschoolgraduatesincreasedbyanestimated0.33dollarsperhour(witha95%confidenceintervalof0.060.60);Wagesofcollegegraduatesincreasedbyanestimated1.24dollarsperhour(witha95%confidenceintervalof0.821.66).TheCollegeHighSchoolgapincreasedbyanestimated0.91dollarsperhour.(g)GenderGapinEarningsforHighSchoolGraduatesYearmYsmnmwYswnwmYwYSE(mYwY)95%CI199214.576.55277011.865.2118702.710.1732.373.05200414.887.16277211.925.3915742.960.1922.593.34Thereisalargeandstatisticallysignificantgendergapinearningsforhighschoolgraduates.In2004theestimatedgapwas$2.96perhour;in1992theestimatedgapwas$2.71perhour(in$2004).Theincreaseinthegendergapissomewhatsmallerforhighschoolgraduatesthanitisforcollegegraduates.Chapter4LinearRegressionwithOneRegressorSolutionstoEmpiricalExercises1.(a)·AHE3.320.45uAgeEarningsincrease,onaverage,by0.45dollarsperhourwhenworkersageby1year.(b)Bob’spredictedearnings3.320.45u26$11.70Alexis’spredictedearnings3.320.45u30$13.70(c)TheR2is0.02.Thismeanthatageexplainsasmallfractionofthevariabilityinearningsacrossindividuals.2.(a)CourseEvaluationBeautyIndex-2-10122345Thereappearstobeaweakpositiverelationshipbetweencourseevaluationandthebeautyindex.(b)·_CourseEval4.000.133uBeauty.ThevariableBeautyhasameanthatisequalto0;theestimatedinterceptisthemeanofthedependentvariable(Course_Eval)minustheestimatedslope(0.133)timesthemeanoftheregressor(Beauty).Thus,theestimatedinterceptisequaltothemeanofCourse_Eval.(c)ThestandarddeviationofBeautyis0.789.ThusProfessorWatson’spredictedcourseevaluations4.000.133u0u0.7894.00ProfessorStock’spredictedcourseevaluations4.000.133u1u0.7894.105SolutionstoEmpiricalExercisesinChapter4111(d)Thestandarddeviationofcourseevaluationsis0.55andthestandarddeviationofbeautyis0.789.Aonestandarddeviationincreaseinbeautyisexpectedtoincreasecourseevaluationby0.133u0.7890.105,or1/5ofastandarddeviationofcourseevaluations.Theeffectissmall.(e)TheregressionR2is0.036,sothatBeautyexplainsonly3.6%ofthevarianceincourseevaluations.3.(a)¶Ed13.960.073uDist.Theregressionpredictsthatifcollegesarebuilt10milesclosertowherestudentsgotohighschool,averageyearsofcollegewillincreaseby0.073years.(b)Bob’spredictedyearsofcompletededucation13.960.073u213.81Bob’spredictedyearsofcompletededucationifhewas10milesfromcollege13.960.073u113.89(c)TheregressionR2is0.0074,sothatdistanceexplainsonlyaverysmallfractionofyearsofcompletededucation.(d)SER1.8074years.4.(a)GrowthTradeShare0.511.52-50510Yes,thereappearstobeaweakpositiverelationship.(b)Maltaisthe“outlying”observationwithatradeshareof2.(c)·Growth0.642.31uTradesharePredictedgrowth0.642.31u12.95(d)·Growth0.961.68uTradesharePredictedgrowth0.961.68u12.74(e)MaltaisanislandnationintheMediterraneanSea,southofSicily.Maltaisafreighttransportsite,whichexplainsitslarge“tradeshare”.ManygoodscomingintoMalta(importsintoMalta)andimmediatelytransportedtoothercountries(asexportsfromMalta).Thus,Malta’simportsandexportsandunliketheimportsandexportsofmostothercountries.Maltashouldnotbeincludedintheanalysis.Chapter5RegressionwithaSingleRegressor:HypothesisTestsandConfidenceIntervalsSolutionstoEmpiricalExercises1.(a)·AHE3.320.45uAge(0.97)(0.03)Thet-statisticis0.45/0.0313.71,whichhasap-valueof0.000,sothenullhypothesiscanberejectedatthe1%level(andthus,alsoatthe10%and5%levels).(b)0.45r1.96u0.030.387to0.517(c)·AHE6.200.26uAge(1.02)(0.03)Thet-statisticis0.26/0.037.43,whichhasap-valueof0.000,sothenullhypothesiscanberejectedatthe1%level(andthus,alsoatthe10%and5%levels).(d)·AHE0.230.69uAge(1.54)(0.05)Thet-statisticis0.69/0.0513.06,whichhasap-valueof0.000,sothenullhypothesiscanberejectedatthe1%level(andthus,alsoatthe10%and5%levels).(e)ThedifferenceintheestimatedE1coefficientsis1,1,ˆˆCol