Econometrics? Hourly wages reach a maximum at how many years of work experience? for questions below

Question

Suppose you estimate the following regression model by OLS: 

HWAGE= 5.00 + 0.5YEARS - 0.01YEARS² - 3.00FEMALE- 2.5PARTIME

                    (2.00)   (0.10)            (0.002)               (2.00)               (3.25)where the numbers in brackets are estimated standard errors

a. Interpret the regression output.

b. Hourly  wages  reach  a  maximum  at  how  many  years  of  work experience?

Answer 1

To find the wage-maximizing years of work experience we start by taking the first derivative of wage with respect to years. This gives us:

0.5-0.02YEARS

Next, to find maximum value, we set the derivative equal to zero, and solve for YEARS:

0.5-0.02YEARS=0

YEARS=25

Therefore, the wage reaches maximum at 25 years of work experience.