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Directions: Please follow the instructions closely. Questions 1-10 are worth 9 points each. Question 11 is worth 10 points.
Due: All problem sets have to be turned in at the beginning of the class. Due Dates: March 2
Table 1 includes regression results using the NLSY 97 data set. The omitted racial group is ”non-black/ non-Hispanic”. The omitted census region is ”West”. The omitted favorite ice cream flavor is Chocolate.
Using the regression results in Table 1 perform each of the following tests. Use 0.05 significance level for every problem unless otherwise noted. You should write both the null and alternative hypotheses, calculate the necessary statistics, find correct critical values, and make the correct conclusion
1. Use a t-test to test if education has a statistically significant(2-sided) effect on income in column 1.
2. Use a t-test to test the null hypothesis that black workers make more than nonblack/non-Hispanic, all else equal.
3. Find confidence intervals for the coefficient on education in column 1 and column

4. Use the SSR version of the F-test to test the joint significance of the regional variables. (You can ignore the e + 12)
5. Use the R2 version of the F-test to test the joint significance of the regional variables.
6. Why does the coefficient on education change in each regression? Why would it be so much different in columns 1 and 3?
7. Column 4 includes favorite ice cream flavor. Use an F-test to show that they should not be included.
8. Typically there are stars to denote p-values on regression results. If 1,2, or 3 stars were added for p-values< 0.10, < 0.05, and < 0.01 respectively. How many stars would go on the coefficient for Northeast in column 2?
9. Interpret β2 in column 1.
10. What additional information is needed to test if black workers and Hispanic workers earn different incomes in column 1? What regression could you run to simplify the test?