Amsterdam School of Economics
Empirical Project – Group project 1 (week 1) The Mincer Wage Equation
Aim:
The aim of this project is to familiarise students with the empirical application of ordinary least squares. Creating usable data files and doing proper econometric analysis is part of this.
Report:
Write in two pages A4 a compact analysis of the wage equation. Use the common structure: Title, Authors, Abstract. 1 Introduction. 2. Theoretical background and method. 3 Data 4 Results and preferred empirical model. 5. Conclusion. 6. Appendix (this is in addition to the two pages and should contain all the background material and regressions, specification tests etc.
Submit a pdf version of this report before Monday 11 June 9:00 (am) in Blackboard. Do not forget the names and student numbers of all group members.
Assessment:
This project will be marked out of 10. It is worth 10% of the final mark for the course ’Empirical Project’.
Literature:
Heij, C., Boer, P. de, Franses, P.H., Kloek, T. and Dijk, H.K. van, 2004, Econometric Methods with Applications in Business and Economics, Oxford University Press;
Artikelen:
Björklund, A. and Kjellström, J., 2002, Estimating the return to investments on edu- cation: how useful is the standard Mincer equation?, Economics of Education Review, vol. 21, pp. 195-210.
Harmon, C., and Walker, I., 1995, Estimates of the economic return to schooling for the United Kingdom, American Economic Review, vol.85, pp.1278-1286. (N.B. Dit artikel wordt in deze opdracht enkel aangehaald en wordt nader beschouwd in de opdracht van volgende week.)
Lemieux, T., 2006, The "Mincer Equation" thirty years after Schooling, Experience, and Earnings, Chapter 11 of Jacob Mincer a Pioneer in Modern Labor Eonomics, Gross- bard, S. (ed.), Springer.1
Data:
Description: Cross sections of the American "Current Population Survey" (CPS), years 2003-2014.
• Further info: http://www.nber.org/cps
• Data download: http://www.nber.org/data/current-population-survey-data.html
Specific data for the project: There are ten data files (cps2004.dta – cps2013.dta) available on Blackboard. Each group analyses one year based on the last digit of the of the oldest group member. So e.g. if the last digit is 5 then this group uses cps2009.dta. All data files contain about 8000 observations.
Version
Use year
0
2004
1
2005
2
2006
3
2007
4
2008
5
2009
6
2010
7
2011
8
2012
9
2013
A limited number of variables corresponding to those in Björklund en Kjellström (2002) have been selected. There has not been made a selection based on gender (in contrast with Björklund en Kjellström, 2002) and there is additional information about ethnicity of the respondents. We have the following variables:
• hwage = hourly wage in $;
• female = dummy equal to 1 for woman;
• educ = education in years (approximate, see below);
• leduc = level of schooling (precise definition given below);
• age = age in years;
• lexp = labour market experience (approximate, see below);
1Download: http://link.springer.com/chapter/10.1007/0-387-29175-X_11#page-1
• etngroup = ethnic group (precise definition given below).
Specific information on variables:
• leduc
————————————————-
leduc – educational |
attainment | code educ
——————————–+—————-
Less than 1st grade
|
31
1
1st,2nd,3rd,or 4th grade
|
32
2.5
5th or 6th grade
|
33
5.5
7th and 8th grade
|
34
7.5
9th grade
|
35
9
10th grade
|
36
10
11th grade
|
37
11
12th grade no diploma
|
38
12
High school graduate – high
|
39
12
Some college but no degree
|
40
13
Associate degree in college –
|
41
14
Associate degree in college –
|
42
14
Bachelor's degree (for
|
43
16
Master's degree (for
|
44
18
Professional school degree (for
|
45
24
Doctorate degree (for
|
46
