GENERAL INSTRUCTIONS

1. This assignment is worth 40% of the total module.

2. This assignment must be word-processed. You may need to type equations in your coursework. To insert an equation in Word, click “Insert”, then “Equation”. Then you will have different options to insert your equations. If you are not sure how to do it, please click this video that introduces how to type equations in Word. https://www.youtube.com/watch?v=RQnI0xHDO1c

3. Although it is processed by Word, you MUST submit your final draft in PDF format to the Dropbox. In order to save your file to PDF file, please click “File”- “Save As”-choose “PDF (*.pdf)” as your type-save.
4. Plagiarism: passing off someone else’s work as your own – whether deliberately or inadvertently – amounts to a serious form of academic misconduct. Do not copy and paste material from any source such as lecture notes, academic books, journals or websites. Minor changes of original material does not constitute own work.

5. Where you draw your inspiration from others’ work this should be fully acknowledged through the use of citations with Harvard referencing.

6. The coursework should be typed with a line spacing of 1.5 and with a maximum word limit of 1,500 words. The word count includes all words except: a. Diagrams, tables and figures and their accompanying titles and notes b. The list of references at the end of the document. c. Appendix of Eviews results

7. You are expected to provide formatted tables of important results in the main body of your work. These will be the key results that you will be discussing within your text. In addition, you need to copy your Eviews printout in the Appendix and upload the Eviews file onto NOW dropbox folder.

8. The deadline for submitting an electronic copy of your coursework and Eviews file to the module Dropbox on NOW is by 11pm, Friday 20/12/2019. You MUST submit your final draft in PDF format along with the Eviews file to the Dropbox. Penalties apply to late submission.
9. The assessment criteria detailed overleaf will be used to mark your assignment. Please bear the criteria in mind when preparing your assignment.

Coursework Task
The issue of income and earnings inequality in the labour market has been a subject of great controversy. There are numerous studies concerning the determinants of individuals’ wages. Data are available on NOW under coursework section, named as “Coursework Data.xlsx” and there are 137 different sheets of data in this Excel file. Please check “Data Allocation for Each Student.xlsx” file under coursework section on NOW to find which sheet of data is allocated to you. You are given different sheets of data from NOW, so don’t worry that your results are not identical with those of other students. The data provided were collected from National Longitudinal Survey (NLS) in 1980 in US. All the variables are defined in the following table 1.
Table 1: Definition of variables
Variables Definitions Variables Definitions
wage Monthly earnings in US $ non-white =1 if non-white
IQ IQ score south =1 if live in south
edu Years of education urban =1 if live in urban area
exper Years of working experience sibs Number of siblings
age Age in years brthord Birth order
agesquare Age^2 feduc Father’s education in years
married =1 if married meduc Mother’s education in years

Download your individual coursework dataset and import your data into Eviews. Use the data in table 1 to do the following tasks. Please write your answers for under each question. You may need to include tables and references to support your answers.

1. Undertake a literature review to cover the following aspects, a) Critically explain why the variables in table 1 are relevant in explaining earnings. b) Critically set out any priori expectations about the coefficients, including the signs, size and significance.
Most of the theory can be found from journal articles. You should give references where they are relevant.

2. Run a regression of log(wage) on all the variables given and present your estimation results (regression 1). Using appropriate methods, check whether multicollinearity is an issue in your regression. If so, explain how you would deal with it. Report the new estimation results (regression 2).

3. Carry out the heteroskedasticity tests to check whether the errors in regression 2 are homoskedastic. If the errors are heteroskedastic, re-estimate your model using the correct method and report your estimation results.

4. Discuss and interpret your findings. You should discuss about all coefficients (sign, size and significance) and evaluate your final econometric model in the light of the literature reviewed in question 1. Is the model statistically adequate in representing the data? What are the policy implications? Are there any limitations about your methodology and analysis results?

References References should follow Harvard Referencing Style. You may need to consult the NTU guide to references: http://www.ntu.ac.uk/library/developing_skills/referencing_plagiarism/index.html.

Eviews File Copy your Eviews printout in the Appendix and upload the Eviews file onto NOW dropbox Eviews folder.

Recommended Readings: In addition to the following recommended reading, you need to read more textbooks and journal articles related to the coursework topic. Blackburn, M. and Neumark, D. (1992) Unobserved ability, efficiency wages and interindustry wage differentials, The Quarterly Journal of Economics, 107 (4), 1421-1436. Blinder, A. S. (1973) Wage discrimination: reduced form and structural estimates, The Journal of Human Resources, 8 (4), 436-455. Flanagan, R. J. (1974) Labour force experience, job turnover and racial wage differentials, The Review of Economics and Statistics, 56 (4), 521-529. Gronau, R. (1988) Sex-related wage differentials and women’s interrupted labor careers – the chicken or the egg, Journal of Labor Economics, 6 (3), 277-301. Oaxaca, R. (1973) Male-female wage differentials in urban labor markets, International Economic Review, 14 (3), 693709. Reimers, C. W. (1983) Labor market discrimination against Hispanic and black men, The Review of Economics and Statistics, 65 (4), 570-579.

Insufficient coverage of the literature and theory, with core areas largely ignored. Wholly descriptive in style.
Insufficient coverage of literature and theory; descriptive in style. There needs to be some evaluation of the core literature and principal relevant theory to achieve a pass on this criterion.
Limited coverage of literature and theory; descriptive in style. There needs to be some evaluation of the core literature and principal relevant theory.

Good coverage of reading, but a somewhat limited range of resources utilised. The style tends more towards the descriptive, but does include an element of critical evaluation.
Very good use of a good selection and range of resources beyond the course materials. There is evidence of a critical evaluation of the reading.
Evidence of a wide and appropriate selection and range of resources going well beyond the course materials. There is critical evaluation of the materials.
Question 2: (20%)
Question 3: (15%)

Very limited use made of data. No formal method of analysis adopted, or a method adopted that is inappropriate for the chosen data.
Inadequate use of data, with inappropriate method of analysis or method used incorrectly.
Limited use of appropriate data. The method of analysis chosen is partially correct, and there is limited attempt to link its use to the relevant literature and theory.
Use is made of a range of appropriate data. The method of analysis chosen is acceptable, and there is an attempt to link its use to the relevant literature and theory.
Good use is made of a range of appropriate data selection. The method of analysis chosen is appropriate and its use linked to the relevant literature and theory. Some reference is made to possible alternative methods of analysis.
Very good use is made of a wide range of appropriate data. The method of analysis chosen is appropriate and its use linked to the relevant literature and theory. The choice of method of analysis is based on a rigorous analysis of the options available.

No evaluation presented, with very few, if any, conclusions offered
Insufficient evaluation presented, with limited conclusions that are not always related directly to the research.
Limited evaluation presented, with limited conclusions that are not always related directly to the research.
Adequate evaluation presented, but conclusions and recommendations are not always justified, or are not always related directly to the research.
Good demonstration of evaluative skills in arriving at reasoned and justified conclusions and recommendations, based on the research undertaken
Exceptional demonstration of evaluative skills in arriving at fully reasoned and justified conclusions and recommendations, based clearly on the research undertaken
Presentation and referencing: (10%)
Grammar, spelling, legibility, referencing system
Riddled with typographical and grammatical errors.
Very Poor presentation of data.
No Referencing.

Some typographical and grammatical errors.
Poor presentation of data.
Rare referencing.
A few typographical and grammatical errors.
Acceptable presentation of data.
Limited referencing.
Occasional errors in visual presentation, use of language, paragraphing and presentation of data.
Inaccuracies or inconsistencies in referencing.
Minor errors in presentation, paragraphing and presentation of data.
Referencing relevant and mostly accurate.
Clear, easy to follow presentation. Relevant paragraphing. Use of visual presentation of data. Clear, relevant and consistently accurate referencing.