(Solution) - A regression of average weekly earnings AWE measured in dollars -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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A regression of average weekly earnings (AWE, measured in dollars) on age (measured in years) using a random sample of college-educated fulltime workers aged 25-65 yields the following:

(a) Explain what the coefficient values 696.7 and 9.6 mean.
(b) The standard error of the regression (SER) is 624.1. What are the units of measurement for the SER? (Dollars? Years? Or is SER unit-free?)
(c) The regression R2 is 0.023. What are the units of measurement for the R2? (Dollars? Years? Or is R2 unit-free?)
(d) What is the regression's predicted earnings for a 25-year-old worker? A 45-year-old worker?
(e) Will the regression give reliable predictions for a 99-year-old worker? Why or why not?
(f) Given what you know about the distribution of earnings, do you think it is plausible that the distribution of errors in the regression is normal?
(g) The average age in this sample is 41.6 years. What is the average value of AWE in the sample?