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

Exercise 8

The following equation explains weekly hours of television viewing by a child in terms of the child's age, mother's education, father's education, and number of siblings:

tvhours* = ?0 + ?1age + ?2age2 + ?3motheduc + ?4 fatheduc + ?5sibs + u.

We are worried that tvhours* is measured with error in our survey. Let tvhours denote the reported hours of television viewing per week.

(i) What do the classical errors-in-variables (CEV) assumptions require in this application?

(ii) Do you think the CEV assumptions are likely to hold? Explain.

(vii) Now use each data set to run the simple regression re78 on train, but only for men who were unemployed in 1974 and 1975. How do the training estimates compare now?

(viii) Using your findings from the previous regressions, discuss the potential importance of having comparable populations underlying comparisons of experimental and non-experimental estimates.

Step 1 of 3

An equation that explains hours of television viewed by a child per week in terms of child’s age, mother’s education, father’s education and number of siblings is given as:

It is given that is measured with error and that represent reported hours of television viewing per week