A researcher studying the determinants of unemployment estimates a linear regression
where Y=1 if the worker is unemployed and 0 if employed, the estimated regression equation
is:
Y=0.2-0.05S+0.03AGE
Where:
S is years of education.
AGE is age in years.
How should the coefficient on S be interpreted?
A one-year increase in education is associated with a 5% decrease in the probability of a
worker being unemployed, holding age constant.
A one-year increase in education is associated with a 0.05 decrease in the probability of a
worker being unemployed, holding age constant.
A one-year increase in education is associated with a 5% increase in the probability of a
worker being employed, holding age constant.
None are correct.
An additional year of schooling increases the wage by 0.05 dollars, holding AGE
constant.