Consider a simple model to estimate the effect of factors on number of children of a women in Botswana: children = Bo + ß₁edu + ß₂age + ß3age² + u Where children, edu and age is number of children, years of education and the age of the women. a. Can the model (1) have an endogeneity problem? What is the endogenous variable problem? What causes endogenous? b. Assume that edu is endogenous and the instrumental variable method is used to estimate the model (1). Please suggest an instrumental variable Z for edu?
Consider a simple model to estimate the effect of factors on number of children of a women in Botswana: children = Bo + ß₁edu + ß₂age + ß3age² + u Where children, edu and age is number of children, years of education and the age of the women. a. Can the model (1) have an endogeneity problem? What is the endogenous variable problem? What causes endogenous? b. Assume that edu is endogenous and the instrumental variable method is used to estimate the model (1). Please suggest an instrumental variable Z for edu?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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