Consider the results in Table 5. After running the regression, we test whether the coefficients of the variables hhsize1 and hhsize2 are equal at 5% significance level. The value of the F-statistic is 26.32. Note that the sample size is 1,593. What is the outcome of the test? i). Do you think the regression in Table 5 suffers from omitted variable bias? If yes, which additional variables would you include to control for omitted variable bias

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  1. h)  ii). Consider the results in Table 5. After running the regression, we test whether the coefficients of the variables hhsize1 and hhsize2 are equal at 5% significance level. The value of the F-statistic is 26.32. Note that the sample size is 1,593. What is the outcome of the test? i). Do you think the regression in Table 5 suffers from omitted variable bias? If yes, which additional variables would you include to control for omitted variable bias?

Table 5
. regress size hhinc owner
hhsizel hhsize2 hhsize3, robust noconstant
Linear regression
Number of obs
1,593
F(5, 1588)
3895.70
Prob > F
0.0000
R-squared
0.9255
%3D
Root MSE
353.16
Robust
size
Coefficient
std. err.
P>|t|
[95% conf. interval]
hhinc
.004567
.0006717
6.80
0.000
.0032495
.0058845
owner
404.7925
442.6217
hhsize1
675.8086
24.24222
27.88
0.000
628.2585
723.3587
hhsize2
788.6606
36.47628
21.62
0.000
717.1138
860.2073
hhsize3
993.6609
58.63294
16.95
0.000
878.6548
1108.667
Transcribed Image Text:Table 5 . regress size hhinc owner hhsizel hhsize2 hhsize3, robust noconstant Linear regression Number of obs 1,593 F(5, 1588) 3895.70 Prob > F 0.0000 R-squared 0.9255 %3D Root MSE 353.16 Robust size Coefficient std. err. P>|t| [95% conf. interval] hhinc .004567 .0006717 6.80 0.000 .0032495 .0058845 owner 404.7925 442.6217 hhsize1 675.8086 24.24222 27.88 0.000 628.2585 723.3587 hhsize2 788.6606 36.47628 21.62 0.000 717.1138 860.2073 hhsize3 993.6609 58.63294 16.95 0.000 878.6548 1108.667
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