
Introductory Econometrics 4th Edition by Jeffrey Wooldridge
Edition 4ISBN: 978-0324660609
Introductory Econometrics 4th Edition by Jeffrey Wooldridge
Edition 4ISBN: 978-0324660609 Exercise 8
Suppose that average worker productivity at manufacturing firms (avgprod) depends on two factors, average hours of training (avgtrain) and average worker ability (avgabil):
avgprod = 0 + 1 avgtrain + 2 avgabil + u.
Assume that this equation satisfies the Gauss-Markov assumptions. If grants have been given to firms whose workers have less than average ability, so that avgtrain and avgabil are negatively correlated, what is the likely bias in 1 obtained from the simple regression of avgprod on avgtrain
avgprod = 0 + 1 avgtrain + 2 avgabil + u.
Assume that this equation satisfies the Gauss-Markov assumptions. If grants have been given to firms whose workers have less than average ability, so that avgtrain and avgabil are negatively correlated, what is the likely bias in 1 obtained from the simple regression of avgprod on avgtrain
Explanation
By definition, ß 2 0, and by assumption,...
Introductory Econometrics 4th Edition by Jeffrey Wooldridge
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