1. Regression modeling and interpretation of results. Jacob Mincer (1958) "Investment in

Human Capital and Personal Income Distribution", JPE 66, 281-302 spells a model of education

as an investment, where human capital H equals

H = AeBeduc

where educ is educational attainment, 3 is the return to an investment of the annual earnings

amount (that gives you an extra year of education, and so increases human capital), and A

includes all other factors influencing human capital. If one unit of H can be rented by a firm

at price P, a person with capital H gets wage H x P:

log (wage) = log P + Beduc + log A.

Using the data on workers' wages, education, experience, etc. from the Stata file wage1.dta

(taken from the 1976 Current Population Survey), run a regression of the logarithm of wage on

the education and tenure. Interpret and critically assess your results. Pay attention to possible

biases.