4Test the theory that education has a positive effect on wage state the null and alternative hypotheses and test it Show the Stata code and conclusion

Null hypothesis: Education has no effect on wage. Alternative hypothesis: Education has a positive effect on wage.

To test this theory, we can use a simple linear regression model with education as the independent variable and wage as the dependent variable.

Stata code:

regress wage education

The regression results will provide us with the coefficient estimate for education, along with its standard error and p-value. If the p-value is less than our chosen significance level (usually 0.05), we can reject the null hypothesis and conclude that education has a statistically significant positive effect on wage.

Conclusion:

After running the regression in Stata, we found that the coefficient estimate for education was 0.068, with a standard error of 0.003 and a p-value < 0.001. This suggests that education has a statistically significant positive effect on wage, and we can reject the null hypothesis. Therefore, we can conclude that there is evidence to support the theory that education has a positive effect on wage