We conclude this chapter with an example. Table 2.6 gives data on the level of education (measured by the number of years of schooling), the mean hourly wages earned by people at each level of education, and the number of people at the stated level of education. Ernst Berndt originally obtained the data presented in the table, and he derived these data from the current population survey conducted in May 1985.14 We will explore these data (with additional explanatory variables) in Chapter 3 (Example 3.3, p. 91).
Plotting the (conditional) mean wage against education, we obtain the picture in Figure 2.6. The regression curve in the figure shows how mean wages vary with the level of education; they generally increase with the level of education, a finding one should not find surprising. We will study in a later chapter how variables besides education can also affect the mean wage.
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