A researcher has two independent samples of observations on
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A researcher has two independent samples of observations on (Yi , Xi ). To be specific, suppose that Yi denotes earnings
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A researcher has two independent samples of observations on (Yi , Xi ). To be specific, suppose that Yi denotes earnings, Xi denotes years of schooling, and the independent samples are for men and women. Write the regression for men as Ym,i = bm,0 + bm,1Xm,i + um,i and the regression for women as Yw,i = bw,0 + bw,1Xw,i + uw,i . Let bn m,1 denote the OLS estimator constructed using the sample of men, bn w,1 denote the OLS estimator constructed from the sample of women, and SE(bn m,1) and SE(bn w,1) denote the corresponding standard errors. Show that the standard error of bn m,1 - bn w,1 is given by SE(bn m,1 - bn w,1) = 23SE(bn m,1)42 + 3SE(bn w,1)42 .
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