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    Question

    Suppose you have estimated wage = 10 + 5skill + 3gender, where gender is one for male and zero for female. If gender had been one for female and zero for male, this result would have been

    A Unchanged Correct Answer Incorrect Answer
    B wage = 10 + 5 skill - 3 gender Correct Answer Incorrect Answer
    C wage = 13 + 5 skill + 3 gender Correct Answer Incorrect Answer
    D Wage= 13 + 5 skill - 3 gender Correct Answer Incorrect Answer

    Solution

    When Male E(W) = 10 + 3 + 5 skill = 13 + 5 skill  …………….(1) When female E (W) = 10 + 5 skill…………(2) So, when reference changes Intercept also changes to keep estimated wage same Now, When female E (w) = 13 + 5 skill – 3 gender Female(s) = 13 + 5 skill -3 = 10 + 5 skill …………..(3) When male E (w) = 13 + 5 skill ……….(4) (1)  & (4) are same. (2)    & (3) are same. Hence, Option (d)

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