Consider the following regression model: Weekly Hours = Bo + B1 × Wage + uį Weekly Hours is the average number of hours the individual worked over the course of the ye and Wage is the individual's average hourly wage over the course of the year. A researcher who collects data and regresses Weekly Hours against Wage finds that B1> 0. The OLS estimator, B1, however, likely suffers from omitted variable bias because those individuals who earn high wages may be driven personalities who would work long hours no matter the wage. Because of this omitted variable bias, it is likely the case that ß1 B1.
Consider the following regression model: Weekly Hours = Bo + B1 × Wage + uį Weekly Hours is the average number of hours the individual worked over the course of the ye and Wage is the individual's average hourly wage over the course of the year. A researcher who collects data and regresses Weekly Hours against Wage finds that B1> 0. The OLS estimator, B1, however, likely suffers from omitted variable bias because those individuals who earn high wages may be driven personalities who would work long hours no matter the wage. Because of this omitted variable bias, it is likely the case that ß1 B1.
Calculus For The Life Sciences
2nd Edition
ISBN:9780321964038
Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.
Chapter1: Functions
Section1.EA: Extended Application Using Extrapolation To Predict Life Expectancy
Problem 2EA
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Transcribed Image Text:3.
Consider the following regression model:
Weekly Hours = Bo + B1 × Wage + uj
Weekly Hours is the average number of hours the individual worked over the course of the year
and Wage is the individual's average hourly wage over the course of the year.
A researcher who collects data and regresses Weekly Hours against Wage finds that B1 > 0.
The OLS estimator, B, however, likely suffers from omitted variable bias because those
individuals who earn high wages may be driven personalities who would work long hours no
matter the wage. Because of this omitted variable bias, it is likely the case that B1_B1.
A)
В)
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