After first controlling for the effects of age, race, gender, union status, and location or earnings, suppose a researcher estimates the rate of return to an additional year of schooling to be 10%. The researcher did not (could not?) control for unobserved differences in cognitive ability. Explain why the failure to control for cognitive ability among individuals in the sample creates a potential problem for the credibility of the researcher's estimate of the rate of return to schooling?

After first controlling for the effects of age, race, gender, union status, and location or earnings, suppose a researcher estimates the rate of return to an additional year of schooling to be 10%. The researcher did not (could not?) control for unobserved differences in cognitive ability. Explain why the failure to control for cognitive ability among individuals in the sample creates a potential problem for the credibility of the researcher's estimate of the rate of return to schooling?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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