achievement of individuals. Using data on completed years of education (edu level of education (motheduc), father's level of education (fatheduc), a measu ability (abil), and logarithm of family income (Lincome), the researcher estima Table (1) shows the OLS estimates for each model, with standard errors in pa underneath each coefficient. The dependent variable in all the models is educ Model 1 Model 2 Model 3 Mode Independent variables

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1. A researcher is studying the effect of parents' level of education on educational
achievement of individuals. Using data on completed years of education (educ), mother's
level of education (motheduc), father's level of education (fatheduc), a measure of cognitive
ability (abil), and logarithm of family income (Lincome), the researcher estimates 4 models.
Table (1) shows the OLS estimates for each model, with standard errors in parentheses
underneath each coefficient. The dependent variable in all the models is educ.
Model 1
Model 2
Model 3
Model 4
Independent variables
Lincome
(0.2)
0.15
(0.03)
0.10
(0.02)
0.35
(0.03)
0.09
motheduc
0.27
(0.02)
0.18
(0.03)
0.11
0.17
(0.03)
0.11
fatheduc
(0.02)
0.52
(0.03)
(0.02)
0.39
(0.03)
0.05
(0.01)
8.74
abil
0.53
(0.03)
abil_squared
(0.01)
8.74
6.94
(0.32)
1230
3999.24
0.35
8.4
(0.12)
1230
Intercept
(0.31)
1230
3785.24
0.45
(0.31)
1210
SSR
R-squared
3899.97
0.38
Table (1)
3541.2
0.49
b. Can you reject the claim that the returns to ability are linear? Be explicit about the
hypothesis and any assumptions you make in order to answer the question.
Transcribed Image Text:1. A researcher is studying the effect of parents' level of education on educational achievement of individuals. Using data on completed years of education (educ), mother's level of education (motheduc), father's level of education (fatheduc), a measure of cognitive ability (abil), and logarithm of family income (Lincome), the researcher estimates 4 models. Table (1) shows the OLS estimates for each model, with standard errors in parentheses underneath each coefficient. The dependent variable in all the models is educ. Model 1 Model 2 Model 3 Model 4 Independent variables Lincome (0.2) 0.15 (0.03) 0.10 (0.02) 0.35 (0.03) 0.09 motheduc 0.27 (0.02) 0.18 (0.03) 0.11 0.17 (0.03) 0.11 fatheduc (0.02) 0.52 (0.03) (0.02) 0.39 (0.03) 0.05 (0.01) 8.74 abil 0.53 (0.03) abil_squared (0.01) 8.74 6.94 (0.32) 1230 3999.24 0.35 8.4 (0.12) 1230 Intercept (0.31) 1230 3785.24 0.45 (0.31) 1210 SSR R-squared 3899.97 0.38 Table (1) 3541.2 0.49 b. Can you reject the claim that the returns to ability are linear? Be explicit about the hypothesis and any assumptions you make in order to answer the question.
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