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Consider a linear probability model for whether employers offer a pension plan based on the percentage of workers belonging to a union, as well as other factors: pension = Bo + Bipercunion + B,avgage + B,avgeduc + Bapercmale + Bspercmarr + u,. (i) Why might percunion be jointly determined with pension? (ii) Suppose that you can survey workers at firms and collect information on workers' families. Can you think of information that can be used to construct an IV for percunion? (iii) How would you test whether your variable is at least a reasonable IV candidate for percunion?

Consider a linear probability model for whether employers offer a pension plan based on the percentage of workers belonging to a union, as well as other factors: pension = Bo + Bipercunion + B,avgage + B,avgeduc + Bapercmale + Bspercmarr + u,. (i) Why might percunion be jointly determined with pension? (ii) Suppose that you can survey workers at firms and collect information on workers' families. Can you think of information that can be used to construct an IV for percunion? (iii) How would you test whether your variable is at least a reasonable IV candidate for percunion?

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.8: Probability
Problem 31E
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Consider a linear probability model for whether employers offer a pension plan based on the percentage of workers belonging to a union, as well as other factors: pension = Bo + Bipercunion + B,avgage + B,avgeduc + Bapercmale + Bspercmarr + u,. (i) Why might percunion be jointly determined with pension?
Transcribed Image Text:Consider a linear probability model for whether employers offer a pension plan based on the percentage of workers belonging to a union, as well as other factors: pension = Bo + Bipercunion + B,avgage + B,avgeduc + Bapercmale + Bspercmarr + u,. (i) Why might percunion be jointly determined with pension?
(ii) Suppose that you can survey workers at firms and collect information on workers' families. Can you think of information that can be used to construct an IV for percunion? (iii) How would you test whether your variable is at least a reasonable IV candidate for percunion?
Transcribed Image Text:(ii) Suppose that you can survey workers at firms and collect information on workers' families. Can you think of information that can be used to construct an IV for percunion? (iii) How would you test whether your variable is at least a reasonable IV candidate for percunion?
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