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Stata output from the fixed-effects estimation.
The fixed-effects estimation.

The estimates of the parameter values for the fixed-effects model are very similar to those found for the random-effects model with the exception for the parameters associated with not living in an SMSA ( not_smsa ) and with living in the South ( south ). The random-effects model suggests that the wage level for someone living outside of a SMSA is 87.6 percent of the wage level of someone living in an SMSA; in the fixed-effects model, the wage level outside the SMSA is estimated to be 91.5 percent of the wage level of a woman living in a SMSA. The random-effects model estimates wages in the South are 91.6 percent the level of wages outside the South; the fixed-effects model fixes this wage premium at 91.6 percent.

Stata output from the Hausman test.
The Hausman test results.

The final issue we discuss in this example is the Hausman specification test. If the model is correctly specified and if ν i is uncorrelated with the explanatory variables, then the parameter estimates in the two models should not be statistically different. As shown in Figure 8, we first must same the results of the fixed-effects estimation using the command estimates store fixed_effects . The null hypothesis is that the the difference in that parameter estimates is not systematic. The appropriate test statistic is the χ 2 (8), where the degrees of freedom are equal to the number of parameters in the model (8). The chi-squared statistic of 149.44 is greater than the critical value and we must reject the null hypothesis. The Stata offers this interpretation of this result:

What does this mean? We have an unpleasant choice: we can admit that our model is misspecified—that we have not parameterized it correctly—or we can hold to our specification
being correct, in which case the observed differences must be due to the zero-correlation of and the assumption. [StataCorp: 202]

Exercises

Estimation of a Labor Supply Function. An important issue in labor economics is the responsiveness of the number of hours worked to wages. Because labor supply curves can, in theory, be backward-bending, the sign and size of the impact of wages on the amount of labor supplied is an empirical issue. In this project you are to estimate the demand for labor curve for a cross-section of adult males.

The model to be estimated is:

y i t = β 0 + β 1 h i t + β 2 A g e i t + β 3 A g e i t 2 + β 4 N C i t + β 5 H I i t + ε i t MathType@MTEF@5@5@+=feaagyart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr4rNCHbGeaGqiVCI8FfYJH8YrFfeuY=Hhbbf9v8qqaqFr0xc9pk0xbba9q8WqFfeaY=biLkVcLq=JHqpepeea0=as0Fb9pgeaYRXxe9vr0=vr0=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@672E@

where:

y it = natural logarithm of individual i ’s wage rate in year t ,

h it = natural logarithm of total number of hours worked by individual i in year t ,

Age it = age of individual i in year t ,

NC it = number of children of individual i in year t , and

HI it = an dummy variable equal to 1 if individual i in year t has bad health and 0 otherwise.

The data are from Ziliak, James P. (1997) “Efficient Estimation with Panel Data When Instruments Are Predetermined: An Empirical Comparison of Moment-Condition Estimators,” Journal of Business&Economic Statistics 15 (4): 419-431. Ziliak (p. 423) describes his data as follows:

The data used to estimate the life-cycle labor-supply parameters come from Waves XII-XXI (calendar years 1978-1987) of the PSID. The sample is selected on many dimensions and is similar to other research studying life-cycle models of labor supply. The sample is restricted to continuously married, continuously working, prime-age men aged 22-51 in 1978 from the Survey Research Center random subsample of the PSID. In addition the individual must either be paid an hourly wage rate or must be salaried, and he cannot be a piece-rate worker or self-employed. This selection process resulted in a balanced panel of 532 men over 10 years or 5,320 observations. The real wage rate, w it ,. is the hourly wage reported by the panel participant rather than the average wage (annual earnings over annual hours) to minimize division bias (Borjas 1981).

Questions & Answers

where we get a research paper on Nano chemistry....?
Maira Reply
what are the products of Nano chemistry?
Maira Reply
There are lots of products of nano chemistry... Like nano coatings.....carbon fiber.. And lots of others..
learn
Even nanotechnology is pretty much all about chemistry... Its the chemistry on quantum or atomic level
learn
Google
da
no nanotechnology is also a part of physics and maths it requires angle formulas and some pressure regarding concepts
Bhagvanji
Preparation and Applications of Nanomaterial for Drug Delivery
Hafiz Reply
revolt
da
Application of nanotechnology in medicine
what is variations in raman spectra for nanomaterials
Jyoti Reply
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
Damian
yes that's correct
Professor
I think
Professor
Nasa has use it in the 60's, copper as water purification in the moon travel.
Alexandre
nanocopper obvius
Alexandre
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
Rafiq
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
Damian
How we are making nano material?
LITNING Reply
what is a peer
LITNING Reply
What is meant by 'nano scale'?
LITNING Reply
What is STMs full form?
LITNING
scanning tunneling microscope
Sahil
how nano science is used for hydrophobicity
Santosh
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
Rafiq
what is differents between GO and RGO?
Mahi
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
Rafiq
if virus is killing to make ARTIFICIAL DNA OF GRAPHENE FOR KILLED THE VIRUS .THIS IS OUR ASSUMPTION
Anam
analytical skills graphene is prepared to kill any type viruses .
Anam
Any one who tell me about Preparation and application of Nanomaterial for drug Delivery
Hafiz
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
Bob
The nanotechnology is as new science, to scale nanometric
brayan
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Damian
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
Renato
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
?
Kyle
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
Adin
why?
Adin
what school?
Kyle
biomolecules are e building blocks of every organics and inorganic materials.
Joe
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Source:  OpenStax, Econometrics for honors students. OpenStax CNX. Jul 20, 2010 Download for free at http://cnx.org/content/col11208/1.2
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