(i) Estimate the equation using fixed effects. How many firms are used in the FE estimation? How many total observations would be used if each firm had data on all variables (in particular, HRSEMP) for all three years?
(ii) lnterpret the coefficient on GRANT and comment on its significance.
(iii) Is it surprising that GRANTi,t-1 is insignificant? Explain.
(iv) Do largerfirms provide their employees with more or less training, on average? How big are the differences? (For example, ifa firm has 10% more employees, what is the change in average hours oftraining?)
Consider a family saving function forthe population of all families in the United States:
[31 INC + [i2HHSlZE + [i3EDUC + [i4AGE + e
where HHSIZE is household size, EDUC is years of education ofthe household head, and AGE is age