CUTN -GE/EE Econometrics Assignment-2: Third Assessment
Due date for submission: 12th April 2013
Instructions
Use the data asgn2_wage equation.dta to choose the state and estimate the wage equation. The analysis is to study the wage discrimination in the labour market among minority groups organized on the basis of caste and religion.

Refer to the papers P1-P5 mentioned below to complete the assignment. Use annex Tables 2, 3 & 4 (pages 19-21) in P3 to organize your results. Variable names are given in bold font and the reference group for the qualitative variable is given within square brackets.
state- stcd has the code for the state that you choose as indicated in the table below.

Dependent variable- logarithm of wage. wage is the variable name
Independent (control) variables: Use the following
(1) age, (2) age-squared, age is the variable
Dummy variables for

(3) Sector- sector rural-1, urban-2

(4) Education level- genedu
not literate -01, literate without any schooling: 02, literate without formal schooling: literate through NFEC/AIEP -03, literate through TLC/ AEC -04, others -05; literate with formal schooling including EGS: below primary -06, primary -07, upper primary / middle -08, secondary -10, higher secondary -11,diploma/certificate course -12, graduate -13, postgraduate and above -14.
Note that the variable genedu has many categories and you have to reduce them to the following four and later on in another question to just two groups to estimate the different aspects of modeling given below.
Form four groups – (i) not literate [reference group], (ii) literate+primary, (iii) middle+secondary, (iv) higher secondary and above. Then in a later question reduce it to two -(i) below secondary [reference group] and (ii) secondary and above.

(5) Gender- m_f male-1 [reference group], female-2

(6) Caste
social group: socgp scheduled tribe-1, scheduled caste-2, other backward class-3, others-9.
Use the following three groups…