Your Textbook Discussed the Regression Model When X Is a Binary

question 11

Essay

Your textbook discussed the regression model when X is a binary variable
Y_i = ?₀ + ?₁D_i + u_i, i = 1..., n
Let Y represent wages, and let D be one for females, and 0 for males. Using the OLS formula for the slope coefficient, prove that $\hat{\beta}_ { 1 }$ is the difference between the average wage for males and the average wage for females.

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Definitions:

Spending Power

The financial ability of individuals or groups to purchase goods and services, often influenced by income and economic conditions.

Population

In research or demographics, it refers to the total group of individuals or items that is the subject of statistical analysis.

Subcultures

Subgroups within the larger, or national, culture with unique values, ideas, and attitudes.