Econ 41: Data Analysis & Econometrics : OLS Assumptions and validity Part I Using data about wage and education, we find the following results Figure 1: Table 1: Wage and Log wage Dependent variable: wage lwage (2) (1) educ 60.214*** 0.060*** (6.157) (0.006) Constant 5.973*** 146.952* (80.270) (0.082) 935 935 0.097 Observations R2 Adjusted R2 Residual std. Error (df = 933) F Statistic (df = 1; 933) 0.107 0.106 0.096 382.320 0.400 111.793*** 100.700*** Note: *p<0.1; **p<0.05; ***p<0.01 where lwage is the log of wage, educ is expressed in years of education and wage is the wage per week. 1. interpret the magnitude and significance of education in the model 1. [1pt] 2. interpret the magnitude and significance of education in the model 2. [1pt] 3. Can you compare the Rº to establish which model is preferable? Why? [1pt]
