Assume That the Following Annual Earnings (Y) Equations Were Estimated

question 25

Multiple Choice

Assume that the following annual earnings (Y) equations were estimated separately for union (subscript U) and non-union (subscript N) workers. ED denotes years of education (averaging 14 for union workers and 16 for non-union workers) , SEN denotes years of seniority with the company (averaging 12 for union workers and 10 for non-union workers) .
Y_U = 22,000 + 1000 ED_U + 1000 SEN_U
Y_N = 8000 + 2000 ED_N + 500 SEN_N
-Based on 15-01, what is the total union-non union wage differential?

• A) 4000
• B) 2000
• C) 60000
• D) 5000
• E) 3000

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Definitions:

Single-Factor

Pertaining to studies, experiments, or theories that are concerned with only one variable or aspect.

Multi-Factor

Pertains to situations, conditions, or phenomena influenced by multiple factors or variables, often used in contexts analyzing complex traits or outcomes.

Linear

Describes something arranged in or extending along a straight or nearly straight line.

Circular

Shaped like or resembling a circle, indicating something round in form or movement that typically has no beginning or end point.