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Consider the following model:
Yi = B1 + B2D2i + B3D3i + B4 (D2i D3i) + B5Xi + ui
where Y = the annual salary of a college teacher
X = years of teaching experience
D2 = 1 if male
= 0 if otherwise
D3 = 1 if white
= 0 if otherwise
a. The term (D2iD3i) represents the interaction effect. What does this expression mean?
b. What is the meaning of B4?
c. Find E(Yi | D2 = 1, D3 = 1, Xi) and interpret it. |
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