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Suppose You Are Interested in Examining the Determinants of Earnings

Question 17

Multiple Choice

Suppose you are interested in examining the determinants of earnings.You have information on the age of the individual as well as their level of education: high school graduate,college graduate or graduate degree.Let Y = earnings,X1 = age,X2 = 1 if the person has only a high school degree and 0 otherwise,X3 = 1 if the person has a college degree and 0 otherwise,X4 = 1 if the person has a graduate degree and 0 otherwise.Which of the following model specifications would work for this data?


A) Y = β0 + β1X1 + β2X2 + β3X3
B) Y = β0 + β1X1 + β2X2 + β3X3 + β4X4
C) Y = Suppose you are interested in examining the determinants of earnings.You have information on the age of the individual as well as their level of education: high school graduate,college graduate or graduate degree.Let Y = earnings,X<sub>1</sub><sub> </sub>= age,X<sub>2</sub> = 1 if the person has only a high school degree and 0 otherwise,X<sub>3</sub> = 1 if the person has a college degree and 0 otherwise,X<sub>4</sub> = 1 if the person has a graduate degree and 0 otherwise.Which of the following model specifications would work for this data? A) Y = β<sub>0</sub> + β<sub>1</sub>X<sub>1</sub> + β<sub>2</sub>X<sub>2</sub> + β<sub>3</sub>X<sub>3</sub> B) Y = β<sub>0</sub> + β<sub>1</sub>X<sub>1</sub> + β<sub>2</sub>X<sub>2</sub> + β<sub>3</sub>X<sub>3</sub> + β<sub>4</sub>X<sub>4</sub> C) Y = D) Y = β<sub>1</sub> + β<sub>2</sub> + β<sub>3</sub> + β<sub>4</sub> + X<sub>1</sub>+ X<sub>2</sub> + X<sub>3</sub> + X<sub>4</sub>
D) Y = β1 + β2 + β3 + β4 + X1+ X2 + X3 + X4

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