CPS92 Georgetown Current Population Survey by US Department of Labor Essay

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Business Finance

Homework 2

Empirical Exercise

Stata Data set: CPS92_08.dta

Data set Description: CPS92_08_Description.pdf

1. Use the 2008 data to construct a 95% confidence interval for the mean of real AHE for high school graduates. Construct a 95% confidence interval for the mean of real AHE for workers with a college degree. Test the difference between population means.

2. Did real (inflation-adjusted) wages of high school graduates increase from 1992 to 2008? Explain.

Did real wages of college graduates increase?

3. Did the gap between earnings of college and high school graduates increase? Explain, using appropriate estimates, confidence intervals, test statistics, density analysis.

Hint: to test the evolution of the gap, apply t-test technology to the differences of the means . The corresponding SE can be calculated as following 92 08 bh bh Gap Gap 

) ( ) ( ) ( 92 08 92 08 bh bh bh bh Gap Var Gap Var Gap Gap SE  

NOTE: When reporting your results you should provide the following:

– Stata command and output allowing to see how did you get your results;

– Answers to the question specifying the estimates of the parameters of interest, their statistical inference (significance level) and interpretation in real terms.