Consider a model where the return to education depends upon

Consider a model where the return to education depends upon the amount of work experience (and vice versa): log(wage) = beta_0+ beta_1 educ + beta_2exper + beta_3educ.exper + u. what is the return to another year of education holding exper fixed State the null hypothesis that the return to education does not depend on the level of exper. What do you think is the appropriate alternative

Solution

exper fixed = u

ii)

Ho : Bo = 0

H1 : Bo is different of 0

 Consider a model where the return to education depends upon the amount of work experience (and vice versa): log(wage) = beta_0+ beta_1 educ + beta_2exper + bet

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