Consider a simple model of marriage and wageYit = BXit + Sit + Vitwhere Y is the wage, X is a dummy variable indicating the maritalstatus, S represents "sociability," and V contains other unobservedcausal factors. Assume that Vit is independent of Xis for all i, t, s.We observe a panel data of (Yit, Xit). Which of the followingcondition(s) are sufficient for us to obtain a consistent estimate ofB?Sit is independent of XitSit does not vary with time tVit does not vary with time tSit is independent of Vit

In econometrics, obtaining consistent estimates of coefficients in regression models is crucial.This…

Answered: We observe a panel data of (Yit, Xit).…

We observe a panel data of (Yit, Xit). Which of the following condition(s) are sufficient for us to obtain a consistent estimate of B?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider a simple model of marriage and wage
Yit = BXit + Sit + Vit
where Y is the wage, X is a dummy variable indicating the marital
status, S represents "sociability," and V contains other unobserved
causal factors. Assume that Vit is independent of Xis for all i, t, s.
We observe a panel data of (Yit, Xit). Which of the following
condition(s) are sufficient for us to obtain a consistent estimate of
B?
Sit is independent of Xit
Sit does not vary with time t
Vit does not vary with time t
Sit is independent of Vit

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Step 1: Introduce the econometric challenge in estimating parameters

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Step 2: Analyze the role of sociability

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Step 3: Discuss the time variance of sociability

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Step 4: Address the time variance of other causal factors

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Step 5: Delve into the relationship between sociability and other causal factors

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Step 6: Summarize conditions for consistent estimation

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