Amsterdam School of Economics
Mincer Wage Equation代写 The aim of this assignment is to familiarise students with the empirical application of ordinary least squares.
Empirical Project – Group Assignment 1 (week 1) The Mincer Wage Equation
Aim: Mincer Wage Equation代写
The aim of this assignment is to familiarise students with the empirical application of ordinary least squares. Creating usable data files and doing proper econometric analysis is part of this.
Write in two pages A4 a compact analysis of the wage equation. Use the common structure: Title, Authors, Abstract. 1 Introduction. 2. Theoretical background and method. 3 Data 4 Results and preferred empirical model. 5. Conclusion. 6. Appendix (this is in addition to the two pages and should contain all the background material and regressions, specification tests etc.
Submit a pdf version of this report before Monday 11 June 9:00 (am) in Blackboard. Do not forget the names and student numbers of all group members.
Assessment: Mincer Wage Equation代写
This assignment will be marked out of 10. It is worth 10% of the final mark for the course ’Empirical Project’.
Heij, C., Boer, P. de, Franses, P.H., Kloek, T. and Dijk, H.K. van, 2004, Econometric Methods with Applications in Business and Economics, Oxford University Press;
Björklund, A. and Kjellström, J., 2002, Estimating the return to investments on edu- cation: how useful is the standard Mincer equation?, Economics of Education Review, vol. 21, pp. 195-210.Mincer Wage Equation代写
Harmon, C., and Walker, I., 1995, Estimates of the economic return to schooling for the United Kingdom, American Economic Review, vol.85, pp.1278-1286. (N.B. Dit artikel wordt in deze opdracht enkel aangehaald en wordt nader beschouwd in de opdracht van volgende week.)
Lemieux, T., 2006, The “Mincer Equation” thirty years after Schooling, Experience, and Earnings, Chapter 11 of Jacob Mincer a Pioneer in Modern Labor Eonomics, Gross- bard, S. (ed.), Springer.1Mincer Wage Equation代写
Data: Mincer Wage Equation代写
- Description: Cross sections of the American “Current Population Survey” (CPS), years 2003-2014.
- Further info:http://www.nber.org/cps
- Data download:http://www.nber.org/data/current-population-survey-data.html
- Specific data for the assignment: There are ten data files (cps2004.dta – cps2013.dta) available on Blackboard. Each group analyses one year based on the last digit of the of the oldest group member. So e.g. if the last digit is 5 then this group uses cps2009.dta. All data files contain about 8000 observations.
|3Mincer Wage Equation代写||2007|
|5||2009Mincer Wage Equation代写|
A limited number of variables corresponding to those in Björklund en Kjellström (2002) have been selected. There has not been made a selection based on gender (in contrast with Björklund en Kjellström, 2002) and there is additional information about ethnicity of the respondents. We have the following variables:
- hwage = hourly wage in$;
- female= dummy equal to 1 for woman;
- educ= education in years (approximate, see below);Mincer Wage Equation代写
- leduc= level of schooling (precise definition given below);
- age = age inyears;
- lexp = labour market experience (approximate, see below);Mincer Wage Equation代写
- etngroup= ethnic group (precise definition given below).Mincer Wage Equation代写
Specific information on variables:
- educ is based on leduc. De duration is based on the nominal duration to attain a certain educational level.
- lexp= age – 6 – educ
Statistical tests:Mincer Wage Equation代写
If you carry out a test, you should do so comprehensively. Specify null- and alternative hypotheses, indicate how the teststatistic is calculated, give its (approximate) distribution under the null, give its (realised) value, compare with the critical value, and draw your conclusion.
Motivate and substantiate your answer!
You will investigate and replicated parts of Björklund en Kjellström (2002) using US data for
a single year. They use multiple years and restrict themselves to males. We shall investigate the gender gap.
Starting point is the Mincerian wage equation which in its basic form is given by:
log(y) = β0 + β1s + β2x + β3x2 + ε,
with s = years of schooling and x =years of labour market experience.Mincer Wage Equation代写
In writing the report you can use the following suggestions. Carry out these suggestions where appropriate, but only report relevant results ieither in the main text or the appendix. Do NOT make the appendix a list of all the things suggested here.
- Putthe information in a format that is useful for The data are available in Stata-format. To put it in another format do the following
(a)OpenSTATA and open the data file (with extension .dta
(b)Export the data to the desired format using “File – Export” . The .xls(x) or .csv file types can be read by excel ad EViews. Some packages, like Gretl, EViews, R, can read Sata files directly without transforming. An alternative is using the packageStatTransfer.Mincer Wage Equation代写
2.Younow have the raw You should check that the data are correct (do not contain obvious errors) and are suitable or your investigation.
(a)Make a histogram of houly wage and assess whether it could be normally dis- tributed (test!) Decide whether wage below 2$/h or above 90 $/h should be includedin your What are the mean, mode, and standard deviation?Mincer Wage Equation代写
(b)Considerthe other variables and present a table with summary statistics (in the appendix) Are there strange values?
(c)Dropping observations can be Why? Is it different when observations aredropped on the basis of explanatory variables or on dependent variables?
3.Reproducesome of the results of Björklund en Kjellström (2002). Mincer Wage Equation代写
This means that you should restrict yourselves to males and natural log of hourly Mincer Wage Equation代写
(a)Reproduce Table 1 and Table 2 for your year and consider the
(b)Reproducethe columns III in Table These columns are based on natural loga- rithms and the other columns relate to Box-Cox transformed data. Can you test whether this result is significantly different from (a)?Mincer Wage Equation代写
(c)ReproduceTable 5 with log(hwage) as dependent variable (so no Box-Cox trans- formations) Test if it is appropriate to add interaction effects and interpret the coefficients.
(d)Repeat (a)-(c) forfemales
- Isthere a significant difference between men and Consider models with dum- mies, rather than estimating separate equations for men and women.
- Investigate the effect of Is itsignificant?
- Whichother variables do you think should be included in the Mincerian wage equation? What are the consequences of their non-availability in the data set?
- Testfor non linearity in the (Note that the dependent variable can be in logs, Box-Cox transformed, or not transformed).Mincer Wage Equation代写
- Doesit make sense to test for serial correlation and heteroskedasticity?
- Ifit does, check this possible specification error using different Comment. Pay special attention if different tests give conflicting results.
- Take appropriate action if the specification of the model is
- Isthere a significant effect of ethnicity?Mincer Wage Equation代写
- For the correct specification and interpretation of the model it is important that the explanatory variables are exogenous. Exogeneity of schooling is questionable. An important argument is ability bias, as highlighted by g. Harmon en Walker (1995) whichwe will consider next week. Intelligence is difficult to measure and usually missing from the data, but is an obvious factor in wage. This missing variable is likely to be correlated with variables in the model.
(a)Arguethe sign of bias that result of this missing
(b)Does your bias expression in (a) agree with the results in Harmon en Walker (1995)?
(c)The only potential instrument to be used is age. Is this valid anduseful?