DSE 2012 Econometrics doubt
Posted by Econenthusiast on Jun 22, 2017; 5:40am
URL: http://discussion-forum.276.s1.nabble.com/DSE-2012-Econometrics-doubt-tp7606087.html
Q38 of DSE 2012
Suppose you have 500 observations and you regress wage (measured in rupees per hour) on experience in the labour market, exper (measured in years), and on experience in the labour market squared, (exper^2).
Your estimated OLS equation is
wdage = 3.73+ 0.298 exper - 0.0061 exper^2
(0.35) (0.041) (0.0009)
where the standard errors are in brackets. The estimated equation implies
(a) The returns to experience is strictly increasing
(b) The returns to experience is strictly diminishing
(c) The returns to experience is constant
(d) Experience has no statistically signi cant eff ect on wage
Could someone explain how we arrive at the answer that the returns to experience is strictly diminishing ?