Essay About Maximum Value Of Earnings And Regress L

Econ Case
Name: Chun Yat Kwok        Student ID: 951389819II-1.[pic 1]The maximum value of earnings is 197.23The standard deviation of asvabc is 9.522961II-2.Histogram of the earnings:[pic 2]Histogram of the asvabc:[pic 3]Histogram of l_earnings:[pic 4]III-1.Scatterplot of the explanatory variable against the residuals:[pic 5]Based on the scatterplot, it does not look homoskedastic but heteroskedastic because the variance of disturbance term is increasing as ASVABC increases. III-2.[pic 6]Based on the scatter, it looks like homosckedastic because the variance of the disturbance term is almost the same for all observation.III-3.gen scaled_l_earnings = l_earnings / l_asvabcgen inv_asvabc = 1 / l_asvabc[pic 7]Based on the scatter, it looks like homosckedastic because the variance of the disturbance term is almost the same for all observation.IV-1.In Stata:regress earnings asvabc if _n<4456 [pic 8]regress earnings asvabc if _n>(_N-4455)[pic 9]The null hypothesis is the beta_2 is 0The test statistic, RSS2/RR1 is  6.489917636The degree of freedom  of F is 1 and 4453F critical value at 5% and 1% are 3.85 and 6.66Therefore, we can reject the null hypothesis at 5% level because the test statistic is larger than the critical value at 5% level; however, we fail to reject the null hypothesis at 1% because it is smaller than the critical value at 1% level.IV-2.In Stata:regress l_earnings l_asvabc if _n<4456[pic 10]regress l_earnings l_asvabc if _n>(_N-4455)[pic 11]The test statistic, RSS2/RSS1 is 1.522719047We fail to reject the null hypothesis at 1% and 5% because the test statistic is smaller than the critical value at 1% and 5%.IV-3.In Stata,regress scaled_l_earnings inv_asvabc if _n<4456[pic 12]