Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 2

Let kids denote the number of children ever born to a woman, and let educ denote years of education for the woman. A simple model relating fertility to years of education is

kids = ß0 + ß1 educ + u,

where u is the unobserved error.

(i) What kinds of factors are contained in u? Are these likely to be correlated with level of education?

(ii) Will a simple regression analysis uncover the ceteris paribus effect of education on fertility? Explain.

Step 1 of 6

A Simple Regression Model is a two-variable regression model which is linear in nature. It states a relation between the two variables and to what extent one variable is affected by the other variable.