ECON 151 Lecture Notes - Lecture 5: Dependent And Independent Variables, Production Function, Homo Sapiens
11 Nov 2020
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Document Summary
Log-lin 1 year of schooling=b*100% increase in wage. Log attenuates extreme values : very useful in wage equations. Using national longitudinal survey of youth (nlsy), individuals aged 14-22 at baseline in 1979 and followed up until 1993. Ols (ordinary least square estimates) is the most efficient way to estimate a linear regression; Results gives: wage= +1$ per additional year of education; Log changes the interpretation of the coefficients; log(wage)=1. 33+0. 076 education; 1 additional year of education increases wages by 7. 6 %; Literature estimates return between 7 and 10% in developed countries. Education effect is increased when experience is included; previous models were probably was biased downward; Suggest that education and experience are negatively correlated. Hk definition: everything in your body and mind that may generate future returns. Body and mind: cognitive, non cognitive, strength, sex appeal, # of hair, color of. Hk is not elitist : a football player has potentially much higher hk than a econ hair professor !
