Assign 4

Assign 4 - Question 1 of 13 Estimate these two models 1 Wagei = 0 1agei ui 2 Wagei = 0 1agei 2educationi ui report the estimate for 1 in the first

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Question 1 of 13
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Estimate these two models: 1) Wage i = ß 0 + ß 1 age i +u i 2) Wage i = ß 0 + ß 1 age i 2 education i + u i report the estimate for ß 1 in the first model. 0.458041 Question 2 of 13 report the estimate for ß 1 in the second model. 0.069477 Question 3 of 13 What is the correlation between age and education? (to calculate the correlation in Eviews hold ctrl and click on age and education, then right click, open as group, click on view, correlation, common sample) 0.768287981867992 Question 4 of 13 briefly explain what the problem is in the first model. Since education is correlated to age and a determinant of wage it is a variable that needs to be included in the first model. Since, the first model does not contain education it has omitted variable bias. Question 5 of 13 what is the R 2 in the first model 0.727833
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Question 6 of 13 what is the R 2 in the second model 0.485371 Question 7 of 13 Would it be possible that the R 2 in the second model is less than the R 2
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This note was uploaded on 01/30/2011 for the course 220 322 taught by Professor Delia during the Spring '10 term at Rutgers.

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Assign 4 - Question 1 of 13 Estimate these two models 1 Wagei = 0 1agei ui 2 Wagei = 0 1agei 2educationi ui report the estimate for 1 in the first

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