Given the following regression:
wagei = β0 + β1edui + β2experi + β3exper2i + β4exper3i + ui
wagei = -4.146156 + .5959117edui + .3191707experi -.0074834exper2i + .0000415exper3i + ui
Which order of polynomial (i.e., J) best describes therelationship between work experience and wages? Please explain youranswer.
Using your model above), what is the marginal effect ofexperience when experience increases from 9 to 10 years? What isthe marginal effect of experience when experience increases from 25to 26 years? Does experience exhibit diminishing marginalreturns?
Using your model above, find the average difference in wagesbetween someone with 15 years of experience and someone with 23years of experience, holding education constant. Is the differencestatistically significant?
