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exercises_chapter2_part1

The document contains exercises from Chapter 2 of the Wooldridge textbook, focusing on regression analysis related to various datasets. It includes questions about the relationship between education and fertility, the impact of maternal smoking on infant birth weight, CEO salaries and tenure, and the tradeoff between sleep and work time. Each exercise prompts analysis and interpretation of regression models using specific datasets.

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annikatalpade.2023
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5 views

exercises_chapter2_part1

The document contains exercises from Chapter 2 of the Wooldridge textbook, focusing on regression analysis related to various datasets. It includes questions about the relationship between education and fertility, the impact of maternal smoking on infant birth weight, CEO salaries and tenure, and the tradeoff between sleep and work time. Each exercise prompts analysis and interpretation of regression models using specific datasets.

Uploaded by

annikatalpade.2023
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Exercises Chapter 2 (Numbers as in the Wooldridge textbook)

1
Let kids denote the number of children ever born to a woman, and let educ denote years of
education for the woman. A simple model relating fertility to years of education is

kids = β0 + β1 educ + u

where u is the unobserved error.

(i) What kind of factors are contained in u? Are these likely to be correlated with level of
education?

(ii) Will a simple regression analysis uncover the ceteris paribus effect of education on fertil-
ity? Explain.

4
The dataset BWGHT.DTA contains data on births to women in the United States. Two
variables of interest are the dependent variable, infant birth weight in ounces (bwght), and
an explanatory variable, average number of cigarettes the mother smoked per day during
pregnancy (cigs). The following regression was estimated using data on n = 1, 388 births:

\ = 119.77 − 0.514 cigs


bwght

(i) What is the predicted birth weight when cigs = 0? What about when cigs = 20 (one
pack per day)? Comment on the difference.

(ii) Does the simple regression necessarily capture a causal relationship between the child’s
birth weight and the mother’s smoking habits? Explain.

(iii) To predict a birth weight of 125 ounces, what would cigs have to be? Comment.

(iv) The proportion of women in the sample who do not smoke while pregnant is about .85.
Does this help to reconcile your finding from part (iii)?

C2
The dataset CEOSAL2.DTA contains information on chief executive officers for U.S. corpora-
tions. The variable salary is annual compensation, in thousands of dollars, and ceoten is prior
number of years as company CEO.

(i) Find the average salary and the average tenure in the sample.

(ii) How many CEOs are in the first year as CEO (that is, ceoten = 0)?. What is the longest
tenure as a CEO?

(iii) Estimate the simple regression model

log(salary) = β0 + β1 ceoten + u. (1)

1
Report your results. What is the (approximate) predicted percentage increase in salary
given one more year as a CEO?

C3
Use the data SLEEP75.DTA from Biddle and Hamermesh (1990) to study whether there is a
tradeoff between the time spent sleeping per week and the time spent in paid work. We could
use either variable as the dependent variable. For concreteness, estimate the model

sleep = β0 + β1 totwork + u, (2)

where sleep is minutes spent spleeping at night per week and totwrk is total minutes worked
during the week.

(i) Report your results in equation form along with the number of observations and R2 .
What does the intercept of the equation mean?

(ii) If totwrk increases by 2 hours, by how much is sleep estimated to fall? Do you find this
to be a large effect?

References

Biddle J., Hamermesh D. 1990. Sleep and the Allocation of Time. Journal of Political
Economy 98(5):922–943

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