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Consider the regression model: Wi = β1 + β2Di + α1Xi + α2(DiXi) + ui, where Wi = wages of individual I, Xi = level of experience (measured in years), and Di = 1, if the individual is a college graduate and 0 otherwise. How would you interpret the coefficient α2?

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MCQs on Econometrics, which is the use of statistical methods to develop theories or test existing hypotheses in economics or finance. 
 


Consider the regression model: W<sub>i</sub> = β<sub>1</sub> + β<sub>2</sub>D<sub>i</sub> + α<sub>1</sub>X<sub>i</sub> + α<sub>2</sub>(D<sub>i</sub>X<sub>i</sub>) + u<sub>i</sub>, where W<sub>i</sub> = wages of individual I, X<sub>i</sub> = level of experience (measured in years), and D<sub>i</sub> = 1, if the individual is a college graduate and 0 otherwise. How would you interpret the coefficient α<sub>2</sub>?<br/>






 
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