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Can you explain what it means for a coefficient to be "consistently estimated" in a first difference equation? Aftering differencing, im left with alpha2, gamma2*female and Beta coefficients. Can time invariant coefficients be consistently esimtated in a differenced equation? Do the coefficients in the differenced equation represent the same thing as if it were a simple cross-sectional model, only within the same time period? (see attached image)

Can you explain what it means for a coefficient to be "consistently estimated" in a first difference equation? Aftering differencing, im left with alpha2, gamma2*female and Beta coefficients. Can time invariant coefficients be consistently esimtated in a differenced equation? Do the coefficients in the differenced equation represent the same thing as if it were a simple cross-sectional model, only within the same time period? (see attached image)

MATLAB: An Introduction with Applications
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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Can you explain what it means for a coefficient to be "consistently estimated" in a first difference equation? Aftering differencing, im left with alpha2, gamma2*female and Beta coefficients. Can time invariant coefficients be consistently esimtated in a differenced equation? Do the coefficients in the differenced equation represent the same thing as if it were a simple cross-sectional model, only within the same time period? (see attached image)

Suppose that you have a balanced panel of n working individuals over two time periods. Consider the population model log(wage it) = a₁ + a₂ · 1[t=2] + Zitß + ₁ female; +72 1[t=2]· female; +ci+ Uit where 1[t = 2] is a dummy variable equal to one if t=2 and c; is correlated with zit and female;. Write the log (wage) equation for each of the two time periods and subtract one from the other. Which coefficients in this differenced log(wage) equation can be consistently esti- mated? Interpret those coefficients.
Transcribed Image Text:Suppose that you have a balanced panel of n working individuals over two time periods. Consider the population model log(wage it) = a₁ + a₂ · 1[t=2] + Zitß + ₁ female; +72 1[t=2]· female; +ci+ Uit where 1[t = 2] is a dummy variable equal to one if t=2 and c; is correlated with zit and female;. Write the log (wage) equation for each of the two time periods and subtract one from the other. Which coefficients in this differenced log(wage) equation can be consistently esti- mated? Interpret those coefficients.
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