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Melissa tartari yale econometrics 19 93 three

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Unformatted text preview: n in which each of the education of each of the existing individuals is “replaced” with a randomly draw of education from the distribution that prevails in the existing population, namely, π o , ..., π E ? The answers are as follows: If ZCMA does not hold: the di¤erence in average wages is E 4= ∑ πe (E [abil ] e =0 E E [abil jed = e ]) = ∑ πe E [abil jed = e ] e =0 If ZCMA does hold: there is no di¤erence in average wages. Melissa Tartari (Yale) Econometrics 19 / 93 Three Estimation Methods Having established the key assumption under which ( βo , β1 ) are identi…able - ZCMA - we are now in the business of estimating these unknown parameters. How can we do that? Melissa Tartari (Yale) Econometrics 20 / 93 Three Estimation Methods Having established the key assumption under which ( βo , β1 ) are identi…able - ZCMA - we are now in the business of estimating these unknown parameters. How can we do that? First we need a random sample from the population: f(yi , xi ) ji = 1, ..., ng. Melissa Tartari (Yale) Econometrics 20 / 93 Three Estimation Methods Having established the key assumption under which ( βo , β1 ) are identi…able - ZCMA - we are now in the business of estimating these unknown parameters. How can we do that? First we need a random sample from the population: f(yi , xi ) ji = 1, ..., ng. Observe that we can write yi = βo + β1 xi + ui for each i Melissa Tartari (Yale) Econometrics (2.9) 20 / 93 Three Estimation Methods Having established the key assumption under which ( βo , β1 ) are identi…able - ZCMA - we are now in the business of estimating these unknown parameters. How can we do that? First we need a random sample from the population: f(yi , xi ) ji = 1, ..., ng. Observe that we can write yi = βo + β1 xi + ui for each i (2.9) How do we use this data? There exist several estimation procedures: Melissa Tartari (Yale) Econometrics 20 / 93 Three Estimation Methods Having established the key assumption under which ( βo , β1 ) are identi…able - ZCMA - we are now in the business of estimating these unknown parameters. How can we do th...
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