ECON2209 Lecture 31: 12April_Econstats_Karagodsky
Document Summary
W/ high level of education there is less income discrimination because they are working similar jobs. Wage = + 1edu + 2f emale + 3eduxf emale here 1 refers to the amount wage increases if education goes up. In the picture we see that males and females start at lower wages but there is higher marginal bene t to them going to college. Wage = + 1edu + 2 + 3education. This means that the starting wage for men is given by and the starting wage for females is given by + 2 and the di erence is equal to 2. Perfect multicollinearity: in this case, perfect is bad, say the price of a house is: pricei = + 1sqf t. + 2sqm + i, regress price of a house on square feet and square meters.
