Write the model specification and define the variables for a multiple regression model to predict earnings as a function of age and level of education: high school graduate, college graduate, master degree or doctorate degree
What will be an ideal response?
The model specification for the given data can be represented as:
Y = earnings
X1 = age
X2 = 1 if high school graduate, 0 otherwise
X3 = 1 if college graduate, 0 otherwise
X4 = 1 if masters, 0 otherwise
X5 = 1 if doctorate degree, 0 otherwise
Therefore, the model is Y = ?0 + ?1X1 + ?2X2 + ?3X3 + ?4X4.
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