Chat with us, powered by LiveChat (a) Run an OLS regression of logarithm wage (lwage) on years of schooling (educ), i.e., lwagei = α + βeduci + ui. Use a sentence to interpret βˆOLS. (b) Use ivreg command to run a T - EssayAbode

## 08 Nov (a) Run an OLS regression of logarithm wage (lwage) on years of schooling (educ), i.e., lwagei = α + βeduci + ui. Use a sentence to interpret βˆOLS. (b) Use ivreg command to run a T

(a) Run an OLS regression of logarithm wage (lwage) on years of schooling (educ), i.e.,

lwagei = α + βeduci + ui.

Use a sentence to interpret βˆOLS.

(b) Use ivreg command to run a Two Stage Least Squares (2SLS) regression. Use father’s years of

schooling (fatheduc) as the instrument variable. Use a sentence to interpret βˆ

2SLS.

(c) Check the F-statistics from the first-stage regression. How large it is? Is the instrument variable

weak?

(d) Perform a Hausman’s test to compare OLS with 2SLS estimators. Write down your test hypoth-

esis, p-value and conclusion.

(e) Discuss if father’s years of schooling (fatheduc) is a solid instrument variable, i.e., satisfies con-

ditions of instrument variables.

### Related Tags

Academic APA Assignment Business Capstone College Conclusion Course Day Discussion Double Spaced Essay English Finance General Graduate History Information Justify Literature Management Market Masters Math Minimum MLA Nursing Organizational Outline Pages Paper Presentation Questions Questionnaire Reference Response Response School Subject Slides Sources Student Support Times New Roman Title Topics Word Write Writing