Econ 371
Sample Exam 4 Answers

1.  B

2.  A

3.  A

4.  C

5.  C

6.  D

7.  D

8.  A

9.  Formulate your own answers.

10.  a) The white wage = 700 + 100(15) = 2200;  the black wage = 400 + 80(12) = 1360.  Thus, the observed wage differential is 840.  (b) The residual approach calculates the black wage as if we were using the white wage function.  Thus, black wage = 700 + 100(12) = 1900.  The explained portion of the original wage gap is equal to 300 (2200 - 1900) and is due to the difference in education between the two groups.  The unexplained wage gap is 540 (1900-1360) and is thought to measure discrimination.

11.  Consider spillover, threat, superior worker effects, etc.....

12.  Always a favorite to show up on the exam in some form or another.

13.  Just like #12.