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

Exercise 16

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+?1avgtrain +?2avgabil + 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?