Consider the Population Regression of Log Earnings [Yi,where Yi =

question 61

Multiple Choice

Consider the population regression of log earnings [Yi,where Yi = ln(Earningsi) ] against two binary variables: whether a worker is married (D1i,where D1i=1 if the ith person is married) and the worker's gender (D2i,where D2i=1 if the ith person is female) ,and the product of the two binary variables Yi = β0 + β1D1i + β2D2i + β3(D1i×D2i) + ui.The interaction term

• A)allows the population effect on log earnings of being married to depend on gender
• B)does not make sense since it could be zero for married males
• C)indicates the effect of being married on log earnings
• D)cannot be estimated without the presence of a continuous variable

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