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Problem Set #6* Binary regressions Maximum Extension: 6 pages

The two databases used through the notes ("russia.dta" and "russia1.dta") include also a variable that indicates whether the individual drinks alcohol or not ("alclmo"). With the dataset "russia.dta":

Binary regressions 1. Estimate a model (probit or logit) for the probability of drinking alcohol. Use different specifications (remember you can always use "outreg"). Analyze the statistical significance of every coefficient. Interpret them qualitatively. 2. Compute the marginal effects (both the "mean marginal effects" and the "marginal effects at the mean values"). 3. Estimate a model for male individuals and a model for female individuals. Choose the "typical individuals" (i.e. the most representative male and the most representative female). For each gender, graph the marginal effects of age for different ages. Graph also the predicted probabilities. Explain extensively. 4. Using the database "russia1.dta", estimate a logit model with fixed effects. Present and explain carefully the results.

Course: Applied Econometrics – Universidad de San Andrés, Fall 2010. Professor: Martin Rossi. Assistant: Maria Micaela Sviatschi. *

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