The Following Mincer Equation Has Been Used to Estimate Wages $\beta$

question 7

Multiple Choice

The following Mincer equation has been used to estimate wages: ln (Y) = ln (Y_o) + $\beta$ ₂EDU + $\beta$ ₃ EXPER + $\beta$ ₄ EXPER² + e
Where Y is income,Y₀ is income of someone with no education or experience,EDU is years of education and EXPER is experience in the field.If you suspect males earn higher wages than females and that the wage difference increases with education how would you adjust the econometric model to estimate wages?

• A)include a binary variable for gender,MALE
• B)include an interaction term equal to MALE* EXPER
• C)include an indicator variable for MALE and one for FEMALE
• D)include a binary variable for MALE and an interaction term equal to MALE * EXPER

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Definitions:

Compulsive Attitudes

Mindsets characterized by an uncontrollable urge to perform certain actions or think in a particular way.

Neurotic Needs

In psychoanalytic theory, neurotic needs refer to ten specific, intense, and irrational demands on oneself and others that people develop to manage their anxiety.

Basic Anxiety

This refers to a theory by Karen Horney that suggests this anxiety is the feeling of being isolated and helpless in a hostile world, often stemming from childhood.

Withdrawal

A process or period in which someone disengages from addictive substances or behaviors, often resulting in physical or psychological symptoms.