Hi,

I am doing an econometric project and the theme is on the effect of urbanization on gender gap. The data is Labour Force Survey(2015) of Armenia. But I am struggling to construct the
econometric model. My aim is to investigate the gender income gap from the returns to secondary education and the gender gap in the returns from tertiary education in urban and rural areas and see if the income gap (in lnwages) is narrowed as women get a tertiary degree. And then the aim is to compare it for urban and rural areas.

In other words, I would like to investigate if tertiary education narrows the gender income gap and if there is a difference between urban and rural areas.

But I am really struggling to construct an econometric model, as there is also serious problem with Multicollinearity in educational qualifications.

I reduced the categorical variables of education into 4:" Noeducation, Primary, Secondary, Tertiary" but this didn't solve the issue.

I would really appreciate if there is any advice on how to construct the model and find a solution regarding Multicollinearity.