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Assignment 2-Group 10

The document analyzes wage differences between genders and races using statistical tests and regression. It finds significant differences in wages between males/females and whites/blacks. A regression model explains 12.6% of wage variation and predicts the wage of a sample individual.

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trieuthuan101
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12 views

Assignment 2-Group 10

The document analyzes wage differences between genders and races using statistical tests and regression. It finds significant differences in wages between males/females and whites/blacks. A regression model explains 12.6% of wage variation and predicts the wage of a sample individual.

Uploaded by

trieuthuan101
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Question 1:

a.Test whether there is a discrimination on wage between male and female? Show your
test and explain the result.
H0: There is no difference in wages between male and female employees.
H1: There is a difference in wages between male and female employees.

1.

Based on the T-test results, it's clear that the p-value is lower than 0.05. So, we can reject the
idea that there's no difference in wages between males and females and conclude that there
actually is a difference.
b.Test whether there are discriminations on wage between white, black and others?
Show your test and explain the result. Please also do tests on assumptions.
H0: There is no difference between wages among the racial groups (white, black and others).
H1: There is a difference between wages among the racial groups (white, black and others).

Based on the ANOVA test outcome, it's evident that the p-value is below 0.05. Hence, we
reject the hypothesis that there's no difference in wages among racial groups (white, black,
and others) and conclude that indeed there is a difference.
c. Make a regression of wage on edu, tenure, race, male and age. Show your results and
comment on the estimated coefficients:
Do Tests for significance of each slope;
What percent do the independent variables explain variation in dependent variable?

Analyzing the results, we can infer that:


Each extra year of education correlates with a $0.258 wage rise, keeping other factors
constant.
Each additional year of age is linked to a $0.141 wage hike, holding other variables steady.
For each extra year of employment, there's a $0.046 wage increase, controlling for other
factors.
On average, females earn $0.144 more than males, with other variables held constant.
Individuals from non-white racial groups earn $0.43 more than white individuals, all else
being equal.
*Test for significance of each slope

H0: Each slope (coefficient) in the regression model is equal to zero, indicating that there is
no relationship between the corresponding independent variable and the dependent variable
(wage).
H1: At least one slope (coefficient) in the regression model is not equal to zero, indicating
that there is a relationship between the corresponding independent variable and the dependent
variable (wage).
As all coefficients' p-values are below 0.05, we reject the null hypothesis, indicating that each
coefficient in the regression model is statistically significant. This suggests a relationship
between each independent variable and the dependent variable (wage).
With an R-squared value of 0.126, the independent variables account for 12.6% of the
variance in the dependent variable (wage). However, the remaining 87.4% of the variance
remains unexplained by the model.
d.How much is the white's wage more/less than one of the black on average?

Based on the T-test, the mean difference is 5.7410626. This implies that, on average, the
wage of white individuals is approximately $5.74 higher than that of black individuals.

e.Can you predict the wage of a person who is female with age of 40, tenure = 6, and she is
white and the highest education level she obtained is bachelor.
yi = β0 + β1 xi + εi
Y= -8.145+(-5.569)*male +0.273 *age +0.115*tenure +1.990 *edu + (-1.272)*race
= -8.145+(-5.569)*2 +0.273*40 + 0.115* 6+1.990*16+ (-1.272)*1
= 22.895 USD/hour

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