- Submitted By: Bharat-Koirala
- Date Submitted: 01/06/2015 9:41 AM
- Category: Biographies
- Words: 866
- Page: 4

9.2 Answer the question based on the model

Y = 1286 + 104.97X2i − 0.026X3i + 1.20X4i + 0.69X5i −19.47X6i + 266.06X7i − 118.64X8i − 110.61X9i

T = (4.67) (3.70) (−3.80) (0.24) (0.08) (−0.40) (6.94) (−3.04) (−6.14)

R2 = 0.383, n = 1543

a. Do the signs of the coefficients of the various non-dummy regressors make economic sense? Justify your answer.

We can see that after-tax earning, age, and years of schooling have a positive coefficient which shows a positive relationship between these variables and wife’s annual desired hours of work. The after-tax earning and years of schooling should have a positive relationship with desired hours of work because higher pay and good qualification will lead to higher desired work hours. But age may not have a positive relationship with desired hours of work because higher the age of wife more will be the family responsibilities which means the desired hours of work may be less as the age increases.

The regressors like husbands after-tax earnings, number of children less than 6 yrs and number of children with age between 6 – 13 yrs have a negative relationship with the desired hours of work. In our view, these regressors should have a negative realtionship with the wife’s desired hours of work because higher the husband’s income lower will be the need for the wife to work and higher the number of children more will be the family responsibilty which means less free time for the wife.

b. How would you interpret the dummy variables, X6 and X7? Are these dummies statistically significant? Since the sample is quite large, you may use the “2-t” rule of thumb to answer the question

The positive attitude of wife and husband should have a positive effect on the wife’s desired hours of work but we can see that the coefficient of attitude of wife towards work is negative which does not make economic sense. Moreover, the absolute t-value of this regressor is less than 2 which...