Thursday, December 15, 2011

Econometrics problem, help!?

I first ran a regression of log(pay) on a constant, years of education and log(age). Now I have to: "Run a regression to find out whether any of the coefficients of the previous regression differ between individuals who live in the south and those who do not. Perform a single joint test to investigate this."





I posted the exact wording, because I need some help in understanding the question...I wonder if I understood it wrongly because how do i run ONE regression to tell the difference between the south and not south? Do i need to add in the 'South' binary variable to my first regression? Also, how do I use a joint test (this is a Wald Test, right?) to investigate the difference in coefficients...which coefficients do I jointly test?|||Well it says you have to run a single joint test, but I am only coming at it from a linguistic point of view and not an economic or mathematical one - so the test doesn't automatically split your result into a positive and a negative ratio? It can't be used to establish a relationship between the 'haves' and the 'have nots'?





What I'm saying is that you should really ask this in the mathematics section, I guess!





Edit:


Better still - go to Social Science, then Economics.

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