* Reference: Chapter 7 of
* Jeffrey M. Wooldridge, Introductory Econometrics: A Modern Approach,
* South-Western College Publishing, 2000.

SAMPLE 1 156
READ (LAWSCH85.shd) rank salary cost LSAT GPA libvol faculty age &
        clsize north south east west lsalary studfac top10 &
        r11_25 r26_40 r41_60 llibvol lcost 
SET MISSVALU=-999
SET SKIPMISS
SET NOWARNMISS      

* Define dummy variables for the ranks. 
IF (rank.le.10) top10=1
IF ((rank.ge.11).and.(rank.le.25)) r11_25=1   
IF ((rank.ge.26).and.(rank.le.40)) r26_40=1 
IF ((rank.ge.41).and.(rank.le.60)) r41_60=1 
IF ((rank.ge.61).and.(rank.le.100)) r61_100=1 

* Example 7.8
* Equation (7.13), p. 224.
* Incorporate a set of rank dummy variables.
OLS lsalary top10 r11_25 r26_40 r41_60 r61_100 LSAT GPA llibvol lcost / &
  COEF=BETA STDERR=SE
* Test of joint significance
TEST
 TEST LSAT=0
 TEST GPA=0
 TEST llibvol=0
 TEST lcost=0
END
* Estimate the percentage impact on salary for a top 10 school
* relative to a law school ranked below 100.
* An interpretation of the coefficients is discussed in
*   Peter Kennedy, 1981, "Estimation with Correctly Interpreted Dummy
*   Variables in Semi-Logarithmic Equations," American Economic Review, 
*   p. 801.
GEN1 BT10=BETA:1
GEN1 SET10=SE:1
GEN1 P = 100*(EXP(BT10 - SET10*SET10/2) - 1)
PRINT P

* Now include rank as a single variable.
OLS lsalary rank LSAT GPA llibvol lcost  
TEST
 TEST LSAT=0
 TEST GPA=0
 TEST llibvol=0
 TEST lcost=0
END
STOP