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Linear Regression and Square Residuals

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The data file cps4_small.dat contains 1000 observations on hourly wage rates, education, and other variables.

1. Estimate the linear regression WAGE = B1 + B2EDUC + e and discuss the results.

2. Calculate the least square residuals and plot them against EDUC. Are any patterns evident? If assumptions SR1 - SR5 hold, should any patterns be evident in the least square residuals?

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Linear regression and square residuals are examined.

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