The Current Population Survey (CPS) is the source of the official Government statistics on employment and unemployment.The CPS has been conducted monthly for over 50 years. The survey is also the only comprehensive current source ofinformation on the occupation of workers and the industries in which they work. Information is available from the surveynot only for persons currently in the labor force but also for those who are outside the labor force. Although the mainpurpose of the survey is to collect information on the employment situation, a very important secondary purpose is tocollect information on the demographic status of the population: information such as age, sex, race, marital status,educational attainment, and family structure. From time to time additional questions are included on such importantsubjects as health, education, income, and previous work experience. This small subsample of observations(cps2002small.dta) is drawn from the 2002 CPS Annual Demographic File. It contains 1,000 observations on the followingvariables for individuals who work at least 30 hours per week.1. Age = age in years2. Married = 1 if person is married3. Female = 1 if female4. hsdiploma = 1 if person has a high school diploma5. somecollege = 1 if person has attended college6. Associate = 1 if person has an associate degree7. Bachelors = 1 if person has a bachelor’s degree8. Masters = 1 if person has a master’s degree9. Doctorate = 1 if person has a Ph.D. or other doctorate degree10. prof essional = 1 if person has a graduate professional degree, e.g., J.D., M.D. no high school diploma is the omittedcategory of education11. White = 1 if person is White, non-Hispanic12. Black = 1 if person is Black, non-Hispanic13. hispanic = 1 if person is Hispanic14. Immigrant = 1 if person was born abroad, and not of US parents15. Union = 1 if working on a union job16. Wage = hourly earnings in dollars17. Hours = number of hours worked per week
a. Estimate the regression of log(wage) on age, age2, married, female, hsdiploma, somecollege, associate,bachelors, masters, doctorate, professional, black, hispanic, immigrant and union. Interpret the sign,significance and magnitude of each dummy variable.
b. Interpret the effect of age. Graph the effect of age on log (wage) for an unmarried, nonminority (not hispanic orblack), nonimmigrant, nonunion, male with a bachelor’s degree