Continue to use the information from Question 1.Choose the correct statement about column (7): a. The coefficients are estimated by the usual OLS method. b. A drawback of the model is that a predicted probability can be larger than 1. c. The Probit model is easier to compute than the Logit mode when an interaction term is included. d. The estimates suggest that the Government would be more likely to hire a woman than a man if both candidates have 16 years of schooling, but the Government would be more likely to hire a man than a woman if both candidates have 12 years of schooling. e. The estimates suggest that the Government would hire a job candidate with a probability larger than 10% regardless of the gender.

Questions 1-4 are based on the following scenario:700 income-earning individuals from a district were randomly selected and asked whether they were employed by the government (Gov = 1) or failed their entrance test (Gov = 0); data were also collected on their gender (Male = 1) if male and = 0 if female) and their years of schooling (Schooling, in years). The following table summarizes several estimated models. (Standard errors are in parentheses).Choose the correct statement: a. The large difference between the estimates in column (1) and the ones in column (2) implies that predicted probabilities would be highly sensitive to whether the Logit model is employed or the Probit model is employed. b. Column (1) suggests that the government would hire a job candidate with 16 years of education with 24.5% probability, i.e., 0.245 = 0.272 X 16 - 4.107. c. Column (2) suggests that the government would hire a job candidate with 16 years of education with 67.0% probability, i.e., 0.670 = 0.551 X 16 - 8.146. d. Column (3) suggests that the government would hire a job candidate with 16 years of education with 38.8% probability, i.e., 0.388 = 0.035 X 16 - 0.172. e. Column (4) suggests that the government would not hire anyone because the estimated coefficients are all negative.

The Probit model is easier to compute than the Logit mode when an interaction term is included.

In the probit model, a predicted probability value of 0.95 means that: a. the most likely value the dependent variable will take on is 1.  b. given the values for the explanatory variables, there is a 95 percent probability that the dependent variable will equal one. c. given the values for the explanatory variables, there is a 5 percent probability that the dependent variable will equal zero. d. given the values for the explanatory variables, it is unlikely that the dependent variable will equal zero. e. All of the above. f. None of the above.

In this exercise we examine which factors might influence the wages of employees. To do so, the variable wage is regressed on the variables educ, tenure, tensq, female, married, and m_female.Table 1: Descriptive StatisticsVariable Explanationwage Average hourly wage (in €)educ Years of educationtenure Employment duration (current employer)tensq = tenure × tenurefemale dummy (= 1 if female)married dummy (= 1 if married)m_female      Interaction term (= married × female)The corresponding Stata output is:Source | SS df MS N. of obs. = 526 + F(6, 519) = 57.23 Model | 2851.181 6 475.197 Prob > F = 0.000 Residual | 4309.233 519 8.303 R-squared = 0.398 + Adj. R-sq. = 0.391 Total | 7160.414 525 13.639 Root MSE = 2.882 wage | Coef. S. Err. t-stat. P > |t| [95% Conf. Int.] + educ |0.522 0.046 ? ? ? ? tenure | 0.263 0.046 5.69 0.000 0.172 0.354 tensq | -0.005 0.002 -2.77 0.006 -0.008 -0.001 female | -0.321 0.408 -0.79 0.431 -1.123 0.480 married | 1.807 0.389 4.65 0.000 1.043 2.571 m_female | -2.326 0.526 ? ? ? ? _cons | -2.012 0.662 -3.04 0.002 -3.313 -0.711 Reference: Wooldridge, J. (2013). Introductory Econometrics, 5E. © 2013 South-Western, a part of Cengage, Inc. Reproduced by permission. www.cengage.com/permissions.Does educ have a significant relationship with the outcome wage? State the associated null hypothesis and alternative hypothesis for the coefficient βeduc. Also, determine its statistical significance at the 5 percent significance level in a two-sided test. Which one is the correct answer?Answer 1H0:   vs.   H1: c(0.05, 526-6-1) = 1.645⇒ t > c⇒ H0 can be rejected at the 5 percent significance level.Answer 2H0:   vs.   H1: c(0.05, 526-6-1) = 1.645⇒ t > c⇒ H0 can be rejected at the 5 percent significance level.Answer 3H0:   vs.   H1: c(0.05, 526-6-1) = 1.960⇒ t > c⇒ H0 can be rejected at the 5 percent significance level.Answer 4H0:   vs.   H1: c(0.05, 526-6-1) = 1.960⇒ t > c⇒ H0 can be rejected at the 5 percent significance level.

In the model Wage = B0 + B1 Education + U, if U is correlated with Educatiom and 8, > 0 the oLS estimators areSelect one: a.biased and consistentb,unbiased and inconsistentc,positively biased and consistentd,biased and inconsistent e.negatively biased and inconsistentf,unbiased and consistent