Consider the following TSLS model, where Ability is an endogenous independent variable, while Educ and Age are exogenous. Stage 1 : Ability = 0 + 1 Educ + 2 Age + 3 Expr + 4 ParEduc + 5 KWW + V Stage 2 : log(Wage) = 0 + 1 Educ + 2 Age + 2 Ability + U If we use the Sargan test, the rst-stage F test and the Hausman test together to decide whether a TSLS or an OLS would be more appropriate, ll in the following blanks: at the 5% signi cance level, the critical value for the Sargan test is blank, and the critical value for the Hausman test is blank; if we blank (reject or fail to reject) the Sargan test, blank (reject or fail to reject) the rst-stage F test, and blank (reject or fail to reject) the Hausman test, then it is implied that we shall use the TSLS instead of the OLS estimation
Consider the following TSLS model, where Ability is an endogenous independent variable, while Educ
and Age are exogenous.
Stage 1 : Ability = 0 + 1 Educ + 2 Age + 3 Expr + 4 ParEduc + 5 KWW + V
Stage 2 : log(Wage) = 0 + 1 Educ + 2 Age + 2 Ability + U
If we use the Sargan test, the rst-stage F test and the Hausman test together to decide whether a
TSLS or an OLS would be more appropriate, ll in the following blanks:
at the 5% signi cance level, the critical value for the Sargan test is blank, and the critical value for
the Hausman test is blank;
if we blank (reject or fail to reject) the Sargan test, blank (reject or fail to reject) the rst-stage
F test, and blank (reject or fail to reject) the Hausman test, then it is implied that we shall use the
TSLS instead of the OLS estimation.
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