Suppose you run a regression to estimate the relationship
between time spent doing housework (measured in hours per week) and
earned income (measured in $1,000s per year). You collect a sample
that has White (non-Hispanic/Latino), African American, and
Hispanic/Latino observations and you obtain the following
results:
lnHousework= β0+
β1Income+
δ1white+δ2hispanic+
u
lnHousework=
4.5-0.38Income-0.012white-0.046hispanic
The variable white = 1 if the person identifies as
White (non-Hispanic/Latino) and zero otherwise; the variable
Hispanic = 1 if the person identifies as Hispanic/Latino
only and zero otherwise.
a. Interpret the estimated coefficient in front of the “white”
variable.
b. Interpret the estimated coefficient in front of the
“hispanic” variable.
c. What is the reference group in this example? Explain how you
arrived at your answer.
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