OLS Examples OLS Regression • Problem

Problem 2: Bank Wages• Interpretation– The intercept and slope parameters are highlysignificant at the 0.0 level• This indicates that education has a significant,positive effect on salary– The higher the level of education, the higher the salary• For each extra 1 year of education, salary rises 9%– Almost 49% of the variation in (log) salary is accountedfor by education– The model is significantly different from the naïvemodel as indicated by the p-value for FPage 55Problem 2: Bank WagesModel PortfolioModelIntercept 9.22*(0.0000)Educ 0.092*(0.0000)R 2 0.4680F C 225.2383(0.0000)Notes: p-value in parenthese;*=significantPage 5628