1. [from old exam] Family background affects many economic decisions, including investment in edu- cation. This question asks you to think about the effect of parents' education on children's education, using data on male workers in the U.S. (a) Consider the results of a simple regression of years of education, educ, on mother's years of education, meduc. educ= 10.49+0.294 meduc (0.31) (0.027) Interpret the coefficient on meduc. (b) One might be worried that the assumption E (u meduc) = 0 is violated in the model above. Your colleague proposes the following test: She notes that if the assumption is not satisfied, then there will be correlation between the error term u and the explanatory variable meduc. She suggests looking at whether the sample covariance between u and meduc, Σ¡ meduc¡ · û¡, is equal to zero. What is wrong with this strategy?
1. [from old exam] Family background affects many economic decisions, including investment in edu- cation. This question asks you to think about the effect of parents' education on children's education, using data on male workers in the U.S. (a) Consider the results of a simple regression of years of education, educ, on mother's years of education, meduc. educ= 10.49+0.294 meduc (0.31) (0.027) Interpret the coefficient on meduc. (b) One might be worried that the assumption E (u meduc) = 0 is violated in the model above. Your colleague proposes the following test: She notes that if the assumption is not satisfied, then there will be correlation between the error term u and the explanatory variable meduc. She suggests looking at whether the sample covariance between u and meduc, Σ¡ meduc¡ · û¡, is equal to zero. What is wrong with this strategy?
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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b) please
![1. [from old exam] Family background affects many economic decisions, including investment in edu-
cation. This question asks you to think about the effect of parents' education on children's education,
using data on male workers in the U.S.
(a) Consider the results of a simple regression of years of education, educ, on mother's years of
education, meduc.
educ 10.49+0.294 meduc
(0.31) (0.027)
Interpret the coefficient on meduc.
(b) One might be worried that the assumption E (u\meduc) = 0 is violated in the model above. Your
colleague proposes the following test: She notes that if the assumption is not satisfied, then there
will be correlation between the error term u and the explanatory variable meduc. She suggests
looking at whether the sample covariance between u and meduc, Σ; meduc; · û¡, is equal to zero.
What is wrong with this strategy?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdcde59c5-a8f3-43dc-a140-7a81658fbfec%2F9b6ad47a-6dab-4068-95cc-73407e05c2a5%2F0fsex4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1. [from old exam] Family background affects many economic decisions, including investment in edu-
cation. This question asks you to think about the effect of parents' education on children's education,
using data on male workers in the U.S.
(a) Consider the results of a simple regression of years of education, educ, on mother's years of
education, meduc.
educ 10.49+0.294 meduc
(0.31) (0.027)
Interpret the coefficient on meduc.
(b) One might be worried that the assumption E (u\meduc) = 0 is violated in the model above. Your
colleague proposes the following test: She notes that if the assumption is not satisfied, then there
will be correlation between the error term u and the explanatory variable meduc. She suggests
looking at whether the sample covariance between u and meduc, Σ; meduc; · û¡, is equal to zero.
What is wrong with this strategy?
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