ducation for the woman. A simple model relating fertility to years of education is kids = Bo+ Bieduc + u %3D ere u is the unobserved error. a. What kinds of factors are contained in u? (give two variables as examples) Are these likely to be correlated with level of education? b. Will a simple regression analysis uncover the ceteris paribus effect of education on fertility? Explain. C. Assuming (1) satisfies all the assumptions in linear regression model. Now we have four observations for (educ, kids): (5, 4), (9, 2), (12, 1), (14, 1); Please estimate the model by OLS. d. Please explain the economic meaning of parameters. e. Please calculate the fitted value and residuals for the four observations. f. Please predict the number of kids when educ=D10;

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