Essay
The figure shows is a plot and a fitted linear regression line of the age-earnings profile of 1,744 individuals, taken from the Current Population Survey. 
(a)Describe the problems in predicting earnings using the fitted line. What would the pattern of the residuals look like for the age category under 40?
(b)What alternative functional form might fit the data better?
(c)What other variables might you want to consider in specifying the determinants of earnings?
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(a)There would be many overpredictions f...View Answer
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