ECON 3200 Introduction to Econometrics
Problem set 2
(due date: February 13, 2009)
Problem 1.
(Wooldridge 3.8) Suppose that average worker productivity at
manufacturing °rms (
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 satis°es the GaussMarkov assumptions.
If
grants have been given to °rms whose workers have less than average
ability, so that
avgtrain
and
avgabil
are negatively correlated, what is
the likely bias in
e
°
1
obtained from the simple regression of
avgprod
on
avgtrain
?
Problem 2.
(Wooldridge 3.10) Suppose that you are interested in estimating
the ceteris paribus relationship between
y
and
x
1
. For this purpose, you
can collect data on two control variables,
x
2
and
x
3
. (For concreteness,
you might think of
y
as °nal exam score,
x
1
as class attendance,
x
2
as
GPA up through the previous semester, and
x
3
as SAT or ACT score.)
Let
e
°
1
be the simple regression estimate from
y
on
x
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Fall '08
 NEILSEN
 Econometrics, Regression Analysis, Variance, Errors and residuals in statistics

Click to edit the document details