Economics 2155A/B Chapter Notes - Chapter 3-5: Marginal Utility, Marginal Cost, Human Capital
3 Feb 2018
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Part b - analysis of the stata assignment output. The regression shows that the rate of return to schooling is 8. 18583% on wages. The rate of return to schooling is positively correlated to the natural log of hourly wage. According to the data, the natural log of hourly wages and the rate of return to schooling move in the same direction. An increase in the rate of return to schooling will increase the natural log of hourly wage. The rate of return on investment seems low and at this level some individuals may feel investing their education is worth it but most might not. The regression also shows the effect of gender (being female) is -26. 03038% on wages. Being a female is negatively correlated with the natural log of hourly wages. According to the data, the natural log of hourly wages and the effect of gender (being female) move in opposite directions.
