If you're running a multiple regression of employee Hours Worked on Tenure (in number of years) and MBA (a binary variable equal to 1 for an employee with an MBA, 0 otherwise), what moment conditions would not be used?
A)
$ \frac{\sum_{i=1}^{N}\left(\text { Hours }_{i}-b-m_{1} \text { Tenure }_{i}-m_{2} M B A_{i}\right)}{N} $ = 0
B)
$ \frac{\left. \sum _ { i = 1 } ^ { N } \text { Hours } _ { i } - b - m _ { 1 } \text { Tenure } _ { i } - m _ { 2 } \text { MBA } _ { i } \right) \text { Tenure } _ { i }}{N} $ = 0
C)

$ \frac{\sum _ { i = 1 } ^ { N } \left( \text { Hours } _ { i } - b - m _ { 1 } \text { Tenure } _ { i } \right) M B A _ { i }}{N} $ = 0
D) $\frac { \sum _ { i = 1 } ^ { N } e _ { i } } { N }$ = 0

Question

If you're running a multiple regression of employee Hours Worked on Tenure (in number of years) and MBA (a binary variable equal to 1 for an employee with an MBA, 0 otherwise), what moment conditions would not be used?
A) 
$ \frac{\sum_{i=1}^{N}\left(\text { Hours }_{i}-b-m_{1} \text { Tenure }_{i}-m_{2} M B A_{i}\right)}{N} $ = 0
B) 
$ \frac{\left. \sum _ { i = 1 } ^ { N } \text { Hours } _ { i } - b - m _ { 1 } \text { Tenure } _ { i } - m _ { 2 } \text { MBA } _ { i } \right) \text { Tenure } _ { i }}{N} $ = 0
C)

$ \frac{\sum _ { i = 1 } ^ { N } \left( \text { Hours } _ { i } - b - m _ { 1 } \text { Tenure } _ { i } \right) M B A _ { i }}{N} $ = 0
D) $\frac { \sum _ { i = 1 } ^ { N } e _ { i } } { N }$ = 0

Quizplus · Accepted Answer

The moment condition in option C incorrectly omits the term involving $m_2 \text{ MBA}_i$, which should be included in the regression equation.

If You're Running a Multiple Regression of Employee Hours Worked ∑i=1N( Hours i−b−m1 Tenure i−m2MBAi)N \frac{\sum_{i=1}^{N}\left(\text { Hours }_{i}-b-m_{1} \text { Tenure }_{i}-m_{2} M B A_{i}\right)}{N} N∑i=1N​( Hours i​−b−m1​ Tenure i​−m2​MBAi​)​

If You're Running a Multiple Regression of Employee Hours Worked $\frac{\sum_{i=1}^{N}\left(\text { Hours }_{i}-b-m_{1} \text { Tenure }_{i}-m_{2} M B A_{i}\right)}{N}$