Mathematics, 31.08.2021 15:50 floobrr5
In your sample, all individuals have received a stimulus check of $1,200/month. Let Y be the monthly income (measured in dollars) and X be the total hours worked in a month. You decide to run a regression of Y^net ; the monthly income on hours worked, net of the $1,200 stimulus check (Y^net = Y - 1200). The estimated coefficients are reported below:
Ĺ·net = 1256 + 30 X.
Required:
a. What would happen to the estimates if instead you ran the regression using gross income (hence including the $1,200 for all individuals) on hours worked? Explain.
b. Suppose you construct a new variable, the total hours worked in a week Xweek = X/4. What would be the corresponding slope estimate from a regression of Ynet on Xweek?
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