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Econometrics 206-1

Exam III: 10.10 AM -11.40 AM, 24 April 2017

In answering these below, paste the Stata output only when it is


asked. When pasting output, use the copy as picture option. When
testing a hypothesis, be sure to mention the distribution of the test
statistic, its degrees of freedom, the level of significance and the
associated critical value. DO NOT USE THE STATA test COMMAND.

It would be easiest if you inserted your answer between the


questions below and returned this document. Rename the
document as `your name.docx and upload it on LMS.

You have to do this exam by yourself. You are allowed to consult


the textbook and your notes. You are NOT allowed to consult
anybody whether by speaking, by text messages or email or any
other means. Violations will attract penalties as per Ashoka policy.

1. (a) Regress log of wages on a constant and the female dummy.


Paste output here.

(b) Interpret the coefficient on the female dummy.

(c) Test the null hypothesis that the coefficient on female dummy is
-0.5 against the alternative that the coefficient on female dummy is
less than -0.5. Show your workings.
[5+5+10]

2. (a) Regress log of wages on a constant, the female dummy, age


of the individual and the square of age. Paste your output here.

(b) Controlling for age and the square of age does not seem to
substantially change the coefficient of the female dummy. Why is
that so?
[5+5]

3. (a) Regress log of wages on a constant, the female dummy, age


of the individual the square of age and the social group dummies for
scheduled caste, for scheduled tribe and for other backward caste.
Note the omitted category is the general castes (or forward castes).
Paste your output here.
(b) Test the null hypothesis that none of the social group dummmies
matter, i.e., controlling for sex, age and square of age, the average
of log wages is the same for all categories: scheduled castes,
scheduled tribes, other backward castes and the general (forward)
castes. Do NOT use the Stata test command.

(c) Test the null hypothesis that relative to the general (forward)
castes, scheduled castes and other backward castes suffer the same
extent of discrimination. If this requires new regressions, paste the
output in your answer.
[5+15+15]

4. (a) Regress log of wages on a constant, the female dummy, age


of the individual the square of age, the social group dummies for
scheduled caste, for scheduled tribe and for other backward caste,
and the education dummies for illiterate, literate, primary,
secondary, and higher secondary. Paste the output here.

(b) Compare the above regression with the regression in question 3


(without the education dummies). Does the inclusion of education
dummies alter the discrimination against women, scheduled castes,
scheduled tribes and other backward castes? Why?
[5+15]

5. (a) To the explanatory variables in the regression in Qn 4(a), add


land owned (LandO) and land possessed (LandP) and re-run the
regression. DO NOT paste the output.

(b) Is either of the land variables individually significant at the 5 or


10% level?

(c) Now drop land owned (LandO) and re-run the regression. Is the
included land variable significant at the 5 or 10% level?

(c) Explain the pattern of results observed in (a) and (b).

[4+4+7]

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