number of hours worked squared

[sombrerodraco]

Hello,

My dependent variable is logged annual income.

One of my independent variables is experience squared (the number of hours worked per week).

I do not know the reason for this, but why do we also square experience?

Thanks.

[Janus]

Think about what a polynomial relationship between log income and experience means. For example, given a positive relationship between log income and experience, how would you interpret a positive sign on experience squared? Or a negative one?

[sombrerodraco]

Janus,

Thank you. I think the interaction would level out after a while, since annual incomes cannot indefinitely increase (at the pace) as experience squared increases.

[Janus]

Well, that's something the data will reveal. But if experience squared is related to log income, it suggests a non-linear relationship exists between the two.

[sombrerodraco]

I understand. Thank you Janus once again!