Omitting an important variable а. biases b only if it is not related to the 'School' variable. b. does not affect the estimate of b. It only affects the standard error of the estimated coefficient. С. biases b and affects the standard error of the estimated coefficient. d. biases b only if it is related to the 'School' variable.

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Author:Amos Gilat
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Chapter1: Starting With Matlab
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A researcher is interested to measure returns
to schooling. He ran the regression below:
w = a + b*School
where w is the hourly wage, 'School'
measures years of schooling and b is the
coefficient on schooling. Fill in the missing
blanks to make the statement correct.
Omitting an important variable
а.
biases b only if it is not related to the 'School'
variable.
b.
does not affect the estimate of b. It only
affects the standard error of the estimated
coefficient.
C.
biases b and affects the standard error of the
estimated coefficient.
d.
biases b only if it is related to the 'School'
variable.
Transcribed Image Text:A researcher is interested to measure returns to schooling. He ran the regression below: w = a + b*School where w is the hourly wage, 'School' measures years of schooling and b is the coefficient on schooling. Fill in the missing blanks to make the statement correct. Omitting an important variable а. biases b only if it is not related to the 'School' variable. b. does not affect the estimate of b. It only affects the standard error of the estimated coefficient. C. biases b and affects the standard error of the estimated coefficient. d. biases b only if it is related to the 'School' variable.
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