14. Estimating the variance of the error termSuppose you are interested in looking at the determinants of a worker's wage, and use the following econometric model to do so: wage=β0+β1 educ+u wage=β0+β1 educ+u where educ = years of education u = error term You take a sample of 120 individuals and collect data on each person's wage and level of educational attainment. An unbiased, observable estimator of the variance of the error term (σ2?2) is σˆ2?^2

Given - wage=β0+β1 educ is the econometric model. 120 =N = Number of observations

Answered: n unbiased, observable estimator of the…

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n unbiased, observable estimator of the variance of the error term (σ2?2) is σˆ2?^2

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 5E

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14. Estimating the variance of the error term

Suppose you are interested in looking at the determinants of a worker's wage, and use the following econometric model to do so:

wage=β0+β1 educ+u wage=β0+β1 educ+u

where

	educ = years of education
	u = error term

You take a sample of 120 individuals and collect data on each person's wage and level of educational attainment.

An unbiased, observable estimator of the variance of the error term (σ2?2) is σˆ2?^2

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