💻 Seminar 3
Hypothesis testing & OLS

Author

Affiliation

Dr. George Melios

London School of Economics and Political Science

OLS

OLS

• During this seminar:
  • We will go through Seminar 2 & 3 exercises.
  • Please conduct your analyses on your do-files and keep a log-file.
  • See how we can run OLS on STATA and test hypotheses

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Tasks

1. Regress education on yearsexp. Interpret the coefficient. What does the result tell us?

2. Create a set of dummy variables to capture the different levels of education on yearsexp.

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Tasks

3. Test the null hypothesis that there is no effect of earning a college degree on yearsexp using an OLS regression model. State the alternate hypothesis.
   1. Interpret the estimated coefficient.
   2. Based on the results, do you reject the null hypothesis? Explain using t-statistic, p-values and confidence intervals.
   3. What is the prediction for an applicant who has not earned a a college degree?
   4. What is the prediction for an applicant who has earned a a college degree?

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Tasks

4. Test the null hypothesis that there is no effect of earning a college degree on yearsexp using an OLS regression model using robust Standard Errors. Do the coefficient values change?

5. Test the null hypothesis that there is no effect of earning a college degree on yearsexp using ANOVA.