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In-Class Problem Set # 3 (Additional Problem) : ECON 310 Name(s)

This document contains an analysis of variables that predict salary, including education, experience, and their relationship. It includes outputs from linear regression models in R showing: 1) Both education and experience are significant predictors of salary at the 1% level. 2) Experience has a strong positive relationship with salary, as each additional year of experience is associated with $41,663 higher salary on average. 3) Education also has a positive relationship with salary, but it is only significant at the 5% level. Each additional year of education corresponds to $20,853 higher salary on average.

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62 views

In-Class Problem Set # 3 (Additional Problem) : ECON 310 Name(s)

This document contains an analysis of variables that predict salary, including education, experience, and their relationship. It includes outputs from linear regression models in R showing: 1) Both education and experience are significant predictors of salary at the 1% level. 2) Experience has a strong positive relationship with salary, as each additional year of experience is associated with $41,663 higher salary on average. 3) Education also has a positive relationship with salary, but it is only significant at the 5% level. Each additional year of education corresponds to $20,853 higher salary on average.

Uploaded by

tranthanhnha94
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ECON 310

Name(s):

In-class Problem Set # 3 (additional problem)


Variabless used in the analysis: Salary (in $10, 000) Education (in years of schooling) Experience (in years) A partial output from R follows:
> fit <- lm ( salary ~ educ + exper ) > summary ( fit ) Call : lm ( formula = salary ~ educ + exper ) Residuals : Min 1Q -3.3578 -1.2508

Median 0.0398

3Q 1.1407

Max 4.4413

Coefficients : Estimate Std . Error t value Pr ( >| t |) ( Intercept ) -0.51884 1.59686 -0.325 0.7459 educ 0.20853 0.10123 2.060 0.0421 * exper 0.41663 0.02864 14.549 <2e -16 * * * --Signif . codes : 0 * * * 0.001 * * 0.01 * 0.05 . 0.1 1 Residual standard error : 1.621 on 97 degrees of freedom Multiple R - squared : 0.6924 , Adjusted R - squared : 0.686 F - statistic : 109.2 on 2 and 97 DF , p - value : < 2.2 e -16

> anova ( fit ) Analysis of Variance Table Response : salary Df Sum Sq Mean Sq F value Pr ( > F ) educ 1 17.42 17.42 6.6279 0.01155 * exper 1 556.26 556.26 211.6726 < 2e -16 * * * Residuals 97 254.91 2.63 --Signif . codes : 0 * * * 0.001 * * 0.01 * 0.05 . 0.1 1

1. Is there enough evidence at the 5% signicance level to infer that the model is useful in predicting salary? 2. Is there enough evidence at the 5% signicance level to infer that the years of experience and the salary are linearly related? 3. Is there enough evidence at the 1% signicance level to infer that the years of experience and the salary are positively related? How would your answer change if the level of signicance was 5%? 4. Is there sucient evidence at the 5% signicance level to infer that the years of education and the salary are negatively linearly related? 5. Interpret the coecient b1 . 6. Interpret the coecient b2 .

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