Introduction of Econometric Assignment Example | Topics and Well Written Essays - 750 words

Introduction of Econometric - Assignment Example The study aimed at determining the determinants of hourly pay (dependent variable). The estimated constant and coefficients had a p- value approximately equal to zero and therefore were statistically significant at 5% significant level. Secondly the model was found to be correctly specified with a probability F approximately equal to 0. However, R-squared equalled to 0.2571, implying that the model was not that good, as the explanatory variables , education and experience only accounted for 25.7% of all changes accruing to hour pay, worse though, they accounted for 25.56% when adjusted for degrees of freedom( adjusted R squared =0.2556). Given poor goodness of fit, it was hypothesized there was gender discrimination in hourly pay distribution, hence making gender an explanatory variable. As matter of fact, male hourly wages averaged higher than females’ (table 2). The implication is that men generally earnings are higher than women. The overall model remained significant (prob. F approximately equal to zero). Goodness of fit improved to 0.3042 and 0.3021 when adjusted for degrees of freedom. Although the constant tested not statistically different from zero (p-value 0.073) at 95% confidence level, the coefficients remained statistically significant and hence it was induced that holding education and experience constant, males earn 2.389 euros more than females per hour. The overall fitness of the model improved (R2 = 0.3160 and adjusted R2 = 0.3132), hence making it better than the previous. F-test maintained that the overall model was correctly specified and all coefficients as well as the constant were statistically different from zero with at 1% significance level. According to the estimated model, the reward for an extra year of experience was 0.5632 euros higher in male than in females, holding other variables constant. Secondly, ceteris paribus, females were rewarded 0.3903 euros less