Hey there! Sign in to join this conversationNew here? Join for free

Interpreting coefficents in a regression Watch

Announcements
    • Thread Starter
    Offline

    2
    ReputationRep:
    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?
    Offline

    13
    ReputationRep:
    (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.
    • Thread Starter
    Offline

    2
    ReputationRep:
    (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.
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    How are your GCSEs going so far?
    Useful resources

    Make your revision easier

    Maths

    Maths Forum posting guidelines

    Not sure where to post? Read the updated guidelines here

    Equations

    How to use LaTex

    Writing equations the easy way

    Student revising

    Study habits of A* students

    Top tips from students who have already aced their exams

    Study Planner

    Create your own Study Planner

    Never miss a deadline again

    Polling station sign

    Thinking about a maths degree?

    Chat with other maths applicants

    Can you help? Study help unanswered threads

    Groups associated with this forum:

    View associated groups
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.