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    Say i have a regression:

    ln(wage) = 1.902+0.042exper−0.0008(exper) ^2 −0.266fem

    how do i find out how an additional year of experience affects the hourly wage of an individual in this model?
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    (Original post by Sun_Bear)
    Say i have a regression:

    ln(wage) = 1.902+0.042exper−0.0008(exper) ^2 −0.266fem

    how do i find out how an additional year of experience affects the hourly wage of an individual in this model?
    The general procedure here is to fix values of all the non-varying covariates (in this case the constant and the value of "fem" ) and then calculate (a) the predicted value of ln(wage) for the first value of experience and then (b) the predicted value of ln(wage) for the second value of experience.

    Here, if "exper" is measured in years, you just need to plug in exper+1 to the formula.

    Notice that here, as there is a quadratic term in "exper", the change in ln(wage) for one unit change in "exper" depends on the initial value of "exper" - so, changing from 10 to 11 years of experience would not give you the same as changing from 1 to 2 years.
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    (Original post by Gregorius)
    The general procedure here is to fix values of all the non-varying covariates (in this case the constant and the value of "fem" ) and then calculate (a) the predicted value of ln(wage) for the first value of experience and then (b) the predicted value of ln(wage) for the second value of experience.

    Here, if "exper" is measured in years, you just need to plug in exper+1 to the formula.

    Notice that here, as there is a quadratic term in "exper", the change in ln(wage) for one unit change in "exper" depends on the initial value of "exper" - so, changing from 10 to 11 years of experience would not give you the same as changing from 1 to 2 years.
    Yeah, i know that to get to the solution is to differentiate the regression with respect to exper.

    this should give you: (1/wage) dwage= (0.042-0.0016exper) dexper

    so dwage/dexper = (0.042-0.0016exper) wage

    This is part of the way on how to solve it but teacher didn't tell us from there other than just solve for exper.
 
 
 
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