Imagine You Regressed Earnings of Individuals on a Constant, a Binary

question 30

Multiple Choice

Imagine you regressed earnings of individuals on a constant, a binary variable ("Male") which takes on the value 1 for males and is 0 otherwise, and another binary variable ("Female") which takes on the value 1 for females and is 0 otherwise. Because females typically earn less than males, you would expect

• A)the coefficient for Male to have a positive sign, and for Female a negative sign.
• B)both coefficients to be the same distance from the constant, one above and the other below.
• C)none of the OLS estimators to exist because there is perfect multicollinearity.
• D)this to yield a difference in means statistic.

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