* F-Test for the Earnings Equation * * Keywords: * regression, ols, log, earnings, equation, f-test, married, women * * Description: * We illustrate how to do an F-Test on a Multiple OLS model for the Earnings * Equation of married women * * Author(s): * Noel Roy * Skif Pankov * * Source: * William H. Greene, Econometric Analysis - 7th Edition * Pearson International Edition, Chapter 5, Example 5.5 (page 166) * sample 1 753 * Reading the datafile and naming the variables, specifying to ignore the * first 37 lines of the file read (TableF5-1.shd) lfp whrs kl6 k618 age educ ww / skiplines=37 * Instructing not to display a warning when an observation is skipped - * the model requires us to skip around 300 observations in our data set nowarnskip * Instructing to skip an observation if (1-lfp) is equal to 1 (is TRUE) - i.e., * when a woman does not work skipif (1-lfp) * Generating the natural log of weekly earnings, square of age and the * dummy indicating whether this woman has kids genr lnearn=log(ww*whrs) genr age2=age**2 genr kids=dum(kl6+k618) * Running an OLS regression of lnearn on age, age2, educ and kids, specifying * to include the anova tables with F-tests and that the model is log-linear ols lnearn age age2 educ kids / anova loglin * Alternatively, he formula for the f-statistic can be calculated with the use of * "temporary variables" * Manually calculating the F-ratio for testing the hypothesis that the four * slope coefficients are zero gen1 \$r2/(\$k-1)/((1-\$r2)/(\$n-\$k)) stop