Regression Analysis with Cross-Sectional Data

5/25/05 11:46 AM Page 23. PART 1. Regression Analysis with Cross-Sectional Data P art 1 of the text covers Regression Analysis with Cross-Sectional data. It builds upon a solid base of college algebra and basic concepts in probability and statistics. Appendices A, B, and C contain complete reviews of these topics. Chapter 2 begins with the simple linear Regression model, where we explain one vari- able in terms of another variable. Although simple Regression is not widely used in applied econometrics, it is used occasionally and serves as a natural starting point because the algebra and interpretations are relatively straightforward. Chapters 3 and 4 cover the fundamentals of multiple Regression Analysis , where we allow more than one variable to affect the variable we are trying to explain. Multiple Regression is still the most commonly used method in empirical research, and so these chapters deserve careful attention.

change in hourly wage given another year of education, holding all other factors fixed. Some of those factors include labor force experience, innate ability, tenure with current employer, work ethic, and innumerable other things. The linearity of (2.1) implies that a one-unit change in x has the same effect on y, regardless of the initial value ...

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