Question

A large company is accused of gender discrimination in wages. The following model has been estimated from the companys human resource informayon

WAGE =12+0.8EDU+0.5EXPER−2FEMALE Where WAGE is hourly wage measured in dollars, EDU is years of education,
EXPER is years of relevant experience, and FEMALE indicatirs the employee is female. Holding ali else constant, on average, how much would wage increase if the years of education increases by 5 years?
a. 54
b. 50,8
c. 511.3
d. 55

Answer 1

When the years of education increase by 5 years, the wage would increase by 4 dollars.

Step-by-step explanation:

To calculate how much the wage would increase when the years of education increases by 5 years, we can use the coefficient for the EDU variable in the model.

The coefficient for EDU is 0.8, which means that for every additional year of education, the wage increases by 0.8 dollars. Therefore, when the years of education increase by 5 years, the wage would increase by 5 * 0.8 = 4 dollars.