Economics 409-Assignment #1-due February 23.

First, download gretl if you haven't done so.

Click on "file", then "open data", and then "sample file." You'll see three tabs towards the top of the window; pick the one that says "gretl", not Greene or Ramanathan. Choose the data set called "mroz87." It's about female participation in the labor force and their wages.

Your assignment is to build and explain a model concerningwomen's wages (it'sWWis women's wages in the data set. Your dependent variable should be WW.)

For this assignment, we will focus on women's wages, not the labor force participation decision. Many women in the data set did not work. The data are organized so their observations come at the end of the data set. Set the sample range so that you only use the first 428 observations so that your sample only includes women who worked.

Design your OLS model by choosing appropriate independent variables from the data set. (Do not use RPWG or FAMINC; that would be "cheating.")

Type up the answers to the following:

1. For each independent variable, explain the theory or logic behind why you chose that variable.

2. Estimate the model you designed above and print out the results.

3. Which variables are significant at a 5% error level? What does it mean for a variable to be significant at a 5% error level (explain this in a way someone outside the class would understand, without using jargon.)

4. Pick one of the variables that are significant at a 5% error level and explain what the slope estimate means (explain it in a way that someone outside the class would understand, and use the numerical value of the estimate in your answer.)

5. Think about the OLS assumptions. Which assumptions are most likely to be violated here? Why?

This assignment is due February 23.You may discuss the assignment with other students, but each student must turn in their own individual answer. Your answer can not be copied from another student. Print out your Gretl results and the answers to the questions and turn them in at the lecture (don't upload to webcourse this time.)You can also turn the assignment in by email but in that case, it will not be returned to you. (Include the gretl results as well as your answers to the questions.) Late assignments will not be accepted.